(Bloomberg) -- A decade ago, the U.S. Congress said companiescould tweak retirement plans to get a lot more workers to save.

The 2006 Pension Protection Act made clear that employers wereallowed to automatically sign up employees for a 401(k), and automatically increasetheir contribution percentage year after year. Employeescould still change their plan or opt out, but mostweren’t expected to bother.

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At first, companies were enthusiastic. Employers switched toautomatic plans in droves. By sparing workers extrapaperwork—and making the investment decisions they didn’t feelqualified to make—auto-enrollment could boost 401(k) participationrates as high as 95 percent.

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Auto-escalation could nudge workers to take full advantage ofan employer's match and save the 10 percent or more ofsalaries they generally need to retire comfortably.

Ten years later that momentum has completely stalled, andit turns out the big reason is cost.

According to the latest survey by the Society for HumanResource Management of its HR professional members, fewer than40 percent of employers offer auto-enrollment for newemployees and almost 20 percent offerauto-escalation–numbers that actually fell slightly in the past fewyears. (This isn't to be confused with reenrollment, in whichemployers automatically change the investment mix. Employerscan also auto-enroll existing employees, something 21 percentdo.)

While they don’t fully replace traditional pensions, which havedisappeared from most American workforces,401(k)s do give millions of people some needed extramoney in retirement.

If every employer auto-enrolled workers, retirement incomeswould rise 5 percent overall and 10 percent for the poorest 25percent of Americans, the U.S. Government AccountabilityOffice estimated in May.

If workers were nudged to take full advantage of theiremployers’ matching contributions, retirement incomes would go up13 percent overall and 31 percent for the poorest Americans.

What’s gone wrong? Retirement experts, including organizationsthat represent employers and 401(k) plan providers, stillenthusiastically endorse automatic 401(k) features.

The problem is that companies remain skeptical. Thetop reason, according to organizations that talk to these holdoutemployers, is concern about how expensive all this can be.

By getting more workers to increase contributions to their401(k), you potentially raise the amount you’ll need to pitch in asa matching contribution. If you match the first 3 percent thatworkers put in, for example, and you get another fifth of yourworkforce to meet that threshold, then auto-enrollment can looklike an expensive decision.

But auto-enrollment rarely costs as much as employers fear, saysTony Verheyen, executive director of the Plan Sponsor Council ofAmerica, a group representing more than 1,000 employers.

Companies underestimate how much other costs will fall as theirretirement contributions go up. For example, employers will lowertheir payroll taxes, and sometimes workers' compensation expenses,by diverting more of their salaries into pretaxretirement accounts. They also forget how much adjusting the matchformula can reduce the financial hit, he says.

Instead of matching the first 3 percent of salary, dollar fordollar, for example, employers can stretch out their contributions.“There are a lot of plan-design decisions you can make that willminimize the costs,” Verheyen says.

Other employers just don’t like the idea of changing a 401(k)automatically, fearing resistance from their workers. Generally,though, employees appreciate the help. According to a surveyreleased last month by the Transamerica Center for RetirementStudies, 71 percent of workers find auto-enrollment “appealing,”and 67 percent like the idea of auto-escalation.

“Employers don’t get nearly the pushback on this stuff that theythink they will,” says Nevin Adams, chief content officer of theAmerican Retirement Association, a group for professionals who workwith retirement plans. “Employees don’t complain. Employers havebeen kind of paranoid about this.”

A better retirement plan also offers long-term benefits that arehard to quantify, Adams says.

Workers who aren’t prepared for retirement are going to be morestressed and they’re going to end up working longer than they—andthus, often, their employers—would prefer.

Experts and organizations continue to push employers toreconsider automatic retirement features. The Defined ContributionInstitutional Investment Association, which represents the 401(k)industry, this month released a report touting the benefits foremployers of auto-features. They're a "true win-winopportunity for plan sponsors,” says Lew Minsky, the group’s chiefexecutive officer. He’s optimistic that his arguments will work.“Plan-design trends tend to come in waves, and we are wellpositioned for another wave,” he says.

Several states, including California, are already poised torequire employers to automatically sign up workers forstate-sponsored plans. Eventually, employers may be forced toride this wave—by the federal government or state lawmakers—whetherthey like it or not.

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