Defined contribution plans incorporated stronger automated features in 2015, and other changes are helping plans to evolve so that they better meet employee needs.

Those are some of the findings in Aon Hewitt’s 2015 Trends & Experience in Dened Contribution Plans survey, which found that companies are encouraging employees to save more—not just by automatically enrolling them but by other steps that boost participation and contributions.

The study found that 52 percent of companies with automatic enrollment have a default rate of 4 percent or more, up from just 39 percent in 2013, and 51 percent of plans that have auto enrollment default workers’ contributions at or above the matching funds rate.

But that’s not all.

More employers are also using a back sweep to capture and enroll employees who aren’t already participating.

In fact, the number of employers doing so has doubled since 2013, from 8 percent to 16 percent.

In addition, the automatic contribution escalation ceiling is also on the rise. Almost two thirds (64 percent) of employers set the threshold at 10 percent or more.

In 2013, this fraction was 50 percent. And 42 percent of plans provide a dollar-for-dollar match rate—up from 25 percent in 2011—also a good thing, since it helps to boost participation.

While a 10 percent contribution rate is a vast improvement, it’s not everywhere—and it’s still not enough. Many experts say people shouldn’t stop at 10 percent but should go even higher, to, say, 15 percent. Too many people don’t save at all, and many of those who do have laughably (or cryably) small balances.

In addition, lots of auto-enrolled employees stop there—at whatever the automatic contribution is—and that’s not going to cut it, either, especially for older workers.

While those auto-enrolled workers definitely have more than they would if they never got around to enrolling, people who actively enrolled themselves tended to have higher contributions and healthier balances.

Instant Insights /

DC plans evolving to become more aggressively automated

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