Automated retirement savings systems work, according to Principal Financial Group Inc.
“Do it for me” retirement plan tools, such as automatic enrollment, automatic increases in amounts deferred and lifecycle investment options, increase both participation and savings rates, says Principal, Des Moines, Iowa.
The company’s recent study of participants in its retirement plans found the average participation rate is 6% higher in defined contribution plans that offer automatic enrollment.
Moreover, plans that allow employees to choose a salary-deferral rate preset by their employer, typically coinciding with the employer match, experience 6% higher participation than average, Principal says.