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Auto Features Delivered in ’22

Practice Management

Automatic features served retirement plans — and participants — well in 2022, according to a recent report. 

In its 2023 Reference Point Annual Benchmarking Report, which concerns developments related to 401(k) plan design and participant behavior in 2022, T. Rowe Price reports that plan features such as automatic enrollment and automatic increases in contribution levels had a positive effect in a year roiled by factors that made saving for retirement a challenge. 

Bucking the Trends


Auto-enrollment allowed plans that adopted it to realize participation rates opposite those that did not. Absent auto-enrollment, T. Rowe Price reports, in 2022 a mere 37% of workforces participated in a plan; with it, 86% did. 

More good news — they also report that in 2022 that positive effect became more widespread, with adoption of auto-enrollment rose to 85% of employers. They add that the percentage of employers with auto-enrollment has now been rising for eight years. 

A Gentle Nudge


Employers also are increasingly putting in place automatic increases of contributions into retirement accounts, the report says. T. Rowe Price says that adoption of the auto-increase rose to 49% in 2022, while 48% adopted it in 2021. 

The report adds that the increasing trend of employers introducing higher default rates for contributions continues. It observes that this has been going on for at least six years  a 3% default rate, which had been the standard default rate,  in 2017 was outpaced by a 6% rate. And this, T. Rowe Price says, is contributing to higher contribution rates. 

The average combined deferral rate stood at 8.4% in 2022, the report said, almost the same as the 8.5% of 2021. 

A Challenging Year 


The positive effects of automatic features in 2022 came at a good time, the report suggests, since a variety of factors — such as market volatility, inflation, and the specter of recession — created challenges for retirement plans. 

  • Average retirement account balances dropped in 2022 to $101,000, whereas in 2021 they stood at $124,000. 
  • Allocations to stock funds stood at 31.7% in 2022, down from 34.8% in 2021; at the same time, allocations to money market and stable value funds were at 9.6% in 2022, up from 7.5% in 2021. 
  • Despite the economic challenges in 2022, the percentage of plan participants who took out loans from their retirement accounts fell slightly in 2022 to 18.3% of participants from 18.5% in 2021. At the same time, the report says that average loan size increased in 2022 to a 10-year high of $9,837.