Auto-enrollment into DC plans boosts participation across all racial groups

Automatic employee enrollment into a company 401(k) plan raises participation for all racial and ethnic groups, according to a new study by Vanguard. The increase is particularly notable for blacks and Hispanics, especially those who earn low wages, the report said.

“This study confirms that the use of automatic plan design does reduce racial and ethnic disparities in saving and investing behavior through defined contribution retirement plans,” said Cyndy Pagliaro, a Vanguard researcher and lead author of the report, which is the first in a series examining diversity and defined contribution plan savings. “Plan sponsors concerned about these disparities should consider automatic plan design, but it must be carefully planned to ensure adequate long-term retirement savings for all groups.”