A growing number of retirement plan sponsors will automatically enroll participants at higher default contribution rates in the next four years, Transamerica Retirement Solutions reported Monday.
Ninety-five percent of experts Transamerica surveyed said 55% of plan sponsors would use automatic enrollment by 2019.
Three-quarters said that 45% of plan sponsors would default participants into their plan at a 6% or higher contribution rate.
This rate compares with many plans’ 2% to 4% default rate, which the study said was insufficient to support a successful retirement.
Transamerica noted in a statement that assets invested in retirement plans could grow to $35 trillion in the next few years, owing in part to anticipated system and product improvements, as well as to increased participation.
For instance, some 75% of small private employers (50 to 100 employees) will have defined contribution coverage, up 12% from current levels, according to the survey.
The report said plan sponsors increasingly rely on mobile applications to communicate with participants for notifications, transaction verification and trigger events, such as unusual account activity, that require immediate one-click action.
Seventy-nine percent of experts in the survey said nearly all retirement plan providers in the near future would send participants alerts about their state of retirement readiness.
And 92% expected most retirement plan providers to offer a service showing whether participants are on course to reach a funded retirement.
“While plan sponsors are still focused on increasing participation in retirement plans by their employees, they are also looking for ways to increase contribution rates participants need to achieve a successful retirement,” Transamerica senior vice president of retirement marketing Wendy Daniels said in a statement.
“And an expanded and more sophisticated use of mobile applications will help overcome communications challenges brought on by an increasingly dispersed workplace and also help participants manage their retirement funds more effectively.”
Transamerica, which provides of customized retirement plan solutions for U.S. organizations, conducted a modified Delphi study in the second quarter, examining trends in retirement plans with $25 million to $1 billion in assets. Sixty-two retirement plan experts from 58 organizations across the nation answered the 110-question survey.
Plan sponsors can expect to face challenges from the increasingly dispersed workplace as they boost efforts to increase enrollment and deferral levels, according to the study.
Eighty-six percent of experts polled said they expected the number of mobile and home-based employees to rise by about 20% to 18 million by 2019.
They predicted that one in 10 workers would be self-employed, and also a surge in independent contractors.
As well, plan providers will continue to struggle with the stagnation and even decline of traditional employment, forcing them to reach workers through new channels other than traditional in-office employee meetings.
Enter mobile technology, one of several technologies sponsors will use to keep participants aware of the level of their retirement readiness.
In addition, providers will make their web sites more accessible by handheld devices. By 2019, nearly all retirement plan providers will offer apps and increased functionality for mobile devices, according to 86% of the respondents.