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PSCA: Bigger 403(b) Sponsors Enroll More Automatically

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Larger nonprofit employers are more likely than smaller nonprofits to make signing up for the retirement plan the default option.

Researchers at the Profit Sharing/401k Council of America, Chicago, have published figures quantifying that finding in a summary of results from a recent survey of 552 403(b) plan sponsors.

The sponsors used 2009 plan-year experience to answer the questions.

About 11% of the participating sponsors use automatic enrollment mechanisms either for new hires or for all non-participants, according to the PSCA.

Prevalence of use of auto enrollment ranged from 5.8% at plans with 1 to 49 participants up to about 22% at plans with more than 1,000 participants.

The researchers also found a high-rate of use of variable-rate default investment options for plan participants who failed to indicate how they want assets allocated.

Only about 22% of the participants with default investment options said they use stable-value funds, money-market funds or guaranteed fixed-interest funds.

About 71% of the participants said their plans use target-date funds, lifestyle funds or balanced funds as the default investment options.

Principal Financial Group Inc., Des Moines, Iowa (NYSE:PFG), sponsored the survey.

To look at results from an earlier PSCA 403(b) plan survey, please see 403(b)s Set Defaults.