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June 08, 2015 at 08:58 AM
If employees won’t do it themselves, some employers are doing it for them — rebalancing their retirement plan portfolios, that is.
And it’s not as complex as it might sound. The Wall Street Journal reported that some employers are going beyond auto enrollment to conduct a blanket auto enrollment of all their employees in target-date funds — unless the employees opt out.
And that’s bringing employees better diversification than most of them have when left to their own devices.
One example cited by the Journal is the deferred compensation plan of the State of Illinois, which has 56,000 public employees and is the state’s largest defined contribution plan. In December, the plan notified all participants that, barring them choosing to opt out, it would automatically move everyone on April 22 to a target-date fund.
Before the move was made, up to 29 percent of the plan’s assets were in a single, and relatively risky, asset class, according to William Atwood, executive director of the Illinois State Board of Investment, which oversees the plan.
