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LIMRA: Many Employees Favor Auto Escalation

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Retirement plan contributions ought to increase automatically once participants hit age 45, many workers say.

LIMRA, Windsor, Conn., has published that finding in a summary of results from an online survey of about 300 consumers who participate in or have access to a 401(k) plan or other defined contribution (DC) plan.

Of the total, 38% are automatically enrolled in their DC plans; 21% have plans with automatic contribution “escalation” features; and 16% have both automatic enrollment and escalation.

About 22% of the participants said they want the automatic contribution increase to be 1% annually starting at age 45. And 45%–most notably employees $75,000 or more annually–say they want the increase to be 2% or more annually.

LIMRA found that only 15% of employees, excluding those enrolled in auto escalation plans, had increased their contribution rate in the past 12 months, and that 42% had never changed their DC investments.

Employees who use automatic features seem to have a more favorable attitude toward automatic features, LIMRA says.

- Warren S. Hersch