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Enrollment Choices: Less is More

Offering participants too many options can discourage enrollment. But what’s the “sweet spot” in terms of the optimal number of enrollment options? A test by Fidelity found that 78 percent of participants preferred a three-part enrollment option — and that those who chose that option contributed more. 

In “Can the Enrollment Experience Improve Participant Outcomes?” Fidelity found that 74 percent of the 536 employers it studied said there was low employee interest in retirement topics; 72 percent also said there was a low savings level. The white paper cites research finding that:

  • enrollment drops 1.5 to 2 percent for every 10 new options offered to participants; and

  • participation rises when employees are given fewer and simpler options and decisions to make. 

So Fidelity tested an enrollment option with three predetermined elements: 

  • three contribution rates enrollees could choose from;
  • a single investment option; and

  • an annual percentage increase. 

Fidelity found that 78 percent of participants in the study preferred this simpler enrollment option, and that those who chose it deferred a higher percentage of their pay to their DC plan accounts.

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John Iekel is Senior Writer at ASPPA, as well as Editor of the ASPPA Net and NTSA Net web portals.