Almost 60% of workers who participated in early testing of an enrollment tool by Vanguard chose to have their 401(k) contributions automatically increased each year, the firm announced on Tuesday. By comparison, 49% of new hires who used the traditional enrollment process opted to automatically increase their contributions each year.
Enroll Now is an online enrollment process created by Vanguard that asks participants three questions: how much they want deducted from their paycheck, whether they want to increase that contribution annually and by how much, and what they want to invest in. The interactive form is pre-populated with suggested choices that employees can modify, or they can use the traditional enrollment process.
Research for the Enroll Now tool was conducted between August and December on a single large 401(k) plan. Now it’s being used by more than 530 plans.
Vanguard also found that workers who used the Enroll Now tool had a higher average contribution rate, too: 8.2% compared with 7.5% chosen by Vanguard participants in 2013.
Furthermore, completed enrollments increased by 30% with Enroll Now.