Enrollment in 401(k) plans surged in the plans administered by Bank of America Merrill Lynch.

The retirement plan arm of the global bank services $136 billion for 2.6 million participants enrolled in more than 1,300 plans.

Within the BOA Merrill universe, the first half of 2015 saw 160,707 new plan enrollees, up a notable 44 percent from the same period in 2014.

Kevin Crain, head of institutional retirement and benefits services with BOA Merrill, explained that the spike in enrollment is the result of the recordkeeper’s new product unveilings designed to target participant inertia.

“Sponsors are clearly taking more of a paternalistic role in making it easier for plans to engage workers,” said Crain in an interview.

With that in consideration, Crain said BoA Merrill invested in upgrading its platform offering to participants that are not automatically enrolled.

The Express Enrollment platform is a simplified enrollment solution, explained Crain, newly designed to give participants a cleaner experience, and fewer touch points required to enroll.

“Historically, recordkeepers have made self-enrollment challenging by putting participants through a multi-step enrollment process that required several stops on a website,” said Crain.

“The more steps you make someone go through, the more likely they are to get distracted or discouraged and then disengage. What we did with the Express Enrollment design is give the participants the chance to enroll with one click on the site, and not make them click through four or five pages to finally enroll,” he added.

That efficiency would seem to be working for participants. More than 25,000 new employees self-enrolled through the Express Enrollment platform in the first half of 2015, and plan sponsor adoption of the program increased 65 percent for the year ending in June.

The most efficient enrollment option—auto-enrollment—is also on the rise with sponsors, as 47.5 percent of the plans in the BoA Merrill universe now deploy the strategy.

Most the sponsors that auto-enroll—78 percent—are pairing the feature with auto escalation, a 40 percent year-over-year increase.

New sponsors are proving to be aggressive adopters of BoA’s managed account option, Advice Access. Overall, 57 percent of plans offer the managed option to participants, but 87 percent of new plans added in the 18-month period ending in June included the managed account offering to participants.

And 35 percent of sponsors are using the Advice Access managed account as their qualified default option for participants.

Strong growth in HSAs

Enrollment in HSAs grew by 42 percent year-over-year for the first six months of 2015.

Adoption among millennials is pacing the surge, according to the report, in part because they are often enrolled in high-deductible health care plans that include the savings option, said Crain.

“HSAs are the fastest growing benefit in the country,” said Crain. “Health care costs are the unknown retirement expense. Sponsors are starting to tie HSAs with 401(k) offerings—we think the trend going forward is retirement planning integrated with health care planning.”

In the first half of 2015, millennials accounted for 33 percent of HSA enrollment.

Their balances are predictably lower than boomers’ HSAs, given millennials’ lower salaries, but Crain says steady growth is occurring in all HSA account balances.

“They are like 401(k)s were 30 years ago—25 percent of HSAs have $10,000 or less in them. Over time, average balances are going to grow, and significantly,” he said.

Participant demand driving design

“Employees want to interact with their 401(k) the way the want to interact, and that has meant building website architecture to carry all the way through to participants’ mobile devices,” explained Crain.

For the first half of 2015, 18.5 percent of participants accessed the online benefits portal through their mobile device, compared to 11.9 percent for the first half of 2014.

In May, BoA Merrill updated its mobile user interface to include the Express Enrollment option and a feature allowing deferral rate changes. Since then, 8 percent of all contribution changes have been made via mobile devices.

Crain said the actual design of platforms is not the real challenge when marrying technology with plan design evolutions.

The true challenge is channeling the most comprehensive data to the point where participants interface with their plans, so that personalized analysis can be delivered.

“The technology is pretty easy to write,” said Crain. “The question is data, access to it, and channeling all that we can as recordkeepers, ideally with other information, to create the most personalized experience possible.”

To that end, BoA Merrill released a Retirement Income Estimate Tool in May. So far, interaction with it has been significant, according to the report.

But as BoA Merrill and other recordkeepers race to roll out new tech and user interface innovations, more evidence is emerging that technology can’t answer all of participants’ questions.

Attendance at one-on-one education meetings increased 192 percent in the first half of 2015, according to the study, even as participants have access to tailored information and product tools that not long ago were unimaginable.

Instant Insights /

Enrollment in 401(k)s and HSAs surging, among other trends

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