Staying Power Among the Automatically Enrolled, Research Says

Automatic enrollment has long been touted as an effective means to increase participation in retirement plans. And a recent study has found strong retention among employees added to plan rolls automatically.

In a recent study, the Pew Charitable Trusts found that overall retention rates among those who are automatically enrolled are high. And that result holds even given a wide range of employee/participant priorities and concerns.

The simple presence of automatic enrollment spells participation for 85% of those who would sign up for a plan if one were available but automatic enrollment was not in place; just 15% of them opted out, Pew found. And more than half — 55% — of those who would not have signed up for a plan of their own volition opted to stay in once they were automatically enrolled.

Staying in the plan once automatically enrolled is more likely among new participants who said that certain things would have to happen before they would enroll on their own initiative. These include:

Likelihood of Staying in Plan if Auto Enrolled, Given Certain Priorities

Most Important Change that Would Have  To Occur Before Independent Enrollment	Stay in if Auto Enrolled
Employer contribution or match	93%
Getting closer to retirement	93%
Receiving tax benefits	88%
Paid down debt	86%
Promotion or raise	80%
Confidence in investments	77%

And automatic enrollment, at least in state auto-IRAs, also overcomes reluctance, Pew found:

Likelihood of Staying in State Auto-IRA Plan if Auto Enrolled, Despite Certain Obstacles

Obstacle to Retirement Saving	Stay in if Auto Enrolled in State IRA Plan
Saving for education	94%
Paying for Immediate Major Expenses	86%
Paying off debt	79%
Not willing to sacrifice living standard	69%