The responsibility of saving for retirement in the public sectoris shifting from the employer to the employee in manyjurisdictions.

“Society has now decided that the individual is responsible fortheir retirement plan,” Mike Guarasci, chief financial officer ofICMA-RC, said during a press briefing in New York. “We've shiftedfrom defined benefit to defined contribution. Under definedbenefit, you had professionals running the money, you had assetallocation and investment management run by professionals. Todayyou are your own CIO.”

New research from ICMA-RC,a recordkeeper and investment manager for about 9,000 public-sectorplans and the Center for State andLocal Government Excellence, a public-sector research center,examines the attitudes and behaviors of public-sector employeesregarding retirement savings and issues driving their planparticipation.

These findings are contained in a report titled “NudgingDeferral Rates Within Public Sector Supplemental Retirement Plans.”This report presents the results of a national survey of 400 stateand local government employees, assessing their perceptions ofauto-enrollment into supplemental retirement plans.

With a goal of helping their employees save for retirement,government agencies often offer a supplemental retirement plan, butthus far, few have begun to auto-enroll their employees into theseplans.

According to Joshua Franzel, president and CEO of the Center forState and Local Government Excellence, the attention on featureslike auto-enrollment and auto-escalation largely focused onprivate-sector plans.

“Around 2006, you saw a sea change with a lot of private-sectorplans adopting auto-enrollment,” Franzel told media. “In the publicsector, not so much. We saw some innovators … like South Dakota,which in 2009 passed automatic enrollment.”

In particular, the research investigates the impact of varyingdefault deferral rates on an employee's likelihood to stay in theplan and at what deferral rate. According to Franzel, this has notbeen focused on before from the public-sector perspective,especially from the employees' view.

Respondents in this study were assigned, at random, to a paththat proposed automatic enrollment into a supplemental retirementplan at either an unspecified percentage, a default deferral rateof 1%, a default deferral rate of 4%, or a default deferral rate of7%.

The goal of this survey design was to determine if differentemployer-set default deferral rates would affect auto-enrollmentoutcomes and perceptions.

Overall, if automatically enrolled, three in four respondentswould choose to stay in the plan. Interestingly, the report notesthat the default deferral rate shown did not affect the likelihoodthat respondents would opt out of the plan.

However, the rate did impact whether they would change the rateor leave as is.

Those with a default deferral rate of 1% were significantly morelikely to stay in the plan but change the deferral rate amount. Themost common reason given for choosing to change the defaultdeferral rate was that they need to save more than the set defaultdeferral rate, or that the set percentage is too low.

Meanwhile, those with a default deferral rate of 7% weresignificantly more likely to stay enrolled in the plan and leavethe percentage as is. The most frequently endorsed explanations forthose who chose to stay as-is centered around the set percent beingfair/reasonable (15%), a general sense that saving this amount wasa good idea (13%), and the view that the set percentage willincrease their savings (13%).

Finally, those with unspecified percent were significantly morelikely to report that they are not sure what action they wouldtake.

Among the small number of respondents who chose to opt out ofthe plan (8% of the total sample), the top reason for doing so wasmost often because they feel confident that they are already savingenough for retirement (33%).

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