As employers increasingly focus on how to make benefit plans more effective and get employees to participate, some best practices could offer opportunities to do just that.

That’s according to the Bank of America Merrill Lynch Plan Wellness Scorecard, a semiannual report that looks at trends in employee behaviors and employers’ adoption of plan features.

Among the trends identified in the latest study is growth in both pretax (401(k) and health savings accounts) and Roth 401(k) accounts, with Roths reaping “particularly strong growth.” The number of contributors to the latter, the study said, increased by 38 percent while total contributions were up by 32 percent.

HSA enrollment is growing as well, with the number of accounts up by 47 percent in 2015, total assets under management also up 47 percent and average cash balances up 42 percent.

What may be most important to employers are the best practices that are successful in driving employee participation and contribution rates. Here’s a look at the 7 best practices the report identified.

Enrolling all employees, rather than just new hires, is important (photo: Getty)

1. Enrollment of all employees.

Companies are increasingly turning to enrollment of all employees, . In 2015, automatic enrollment of all employees was up rather than just catching new hires as they enter the companyby 24 percent.

That’s certainly a step in the right direction, since some experts are calling for auto-enrollment in a workplace retirement plan to be made mandatory.

Don't make employees stumble over retirement plan decisions (photo: AP)

2. Make enrollment easier.

One reason people simply don’t follow through on enrollment in a retirement plan can be all those decisions they have to make—everything from how much to save to how to invest the money.

The National Bureau of Economic Research has suggested that one stumbling block to people’s participation in retirement plans is the enrollment process itself, where a “menu of investment options” can be “so complicated as to discourage enrollment.”

BAML reported that its own simplified enrollment solution, Express Enrollment, “showed an employee enrollment rate of 76 percent, compared to 53 percent that enrolled through a traditional method.”

Automatic enrollment and automatic escalation can help save more Benjamins (photo: Getty)

3. Combine automatic features.

If they work well alone, they could work better together: building on automatic enrollment by adding in automatic escalation of contribution can result in participants saving more money without having to think about it.

This is particularly important since many who are auto-enrolled never bother to increase their contributions—and the default rate is not high enough to prepare employees for retirement. But many plan sponsors feel that auto-escalation will make plans more expensive to run—and rather than plan for it, they opt not to incur the potential extra expense.

The study found, however, that of the 47 percent of plans now using auto-enrollment, 85 percent do combine it with auto-escalation. That combination approach was up 39 percent in 2015 from 2014.

Higher default contribution rates will help employees in the long run (photo: Getty)

4. Increase default contribution rates.

Automatic enrollment plans with higher default contribution rates, the survey found, saw higher rates of participation, reaching as high as 88 percent for plans with a 10 percent default rate in 2015.

And that’s good news, since if people start saving more earlier, they’ll be better prepared when retirement day comes.

Employers with many younger workers might want to add a Roth 401(k) option (photo: Getty)

5. Add a Roth 401(k) offering.

This could work particularly well for companies with a large concentration of younger workers, since the study found that while the Roth option appeals to employees of all ages, it’s particularly attractive to those in their 40s and younger who may be looking to diversify their retirement savings from a tax perspective.

More than half (52 percent) of Roth contributors also made pretax contributions.

Everyone's mobile these days, so investing and planning for retirement must be available on the go (photo: Getty)

6. Get mobile.

Again, younger workers prefer to handle such mundane activities as investing via mobile devices; witness the rise of robo-advisors.

That carries over into retirement preparation, too, and companies are jumping on the bandwagon to provide low-cost apps that can allow workers to take care of benefits via the media they’re most comfortable with: smartphones and tablets.

BAML reported that growth in mobile use of its Benefits OnLine site is on the increase, with unique visitors to the site increasing by 57 percent for 2015.

Even people who like robo-advisors still want to have a human to help them with investing (photo: Getty)

7. Don’t forget the personal touch.

Robo-advisors may be the flavor of the month for younger workers in particular, but that doesn’t mean people don’t want some personal interaction with the people who handle their retirement accounts.

The report said that workplace seminars to discuss plan features and provide broader financial education to support optimal savings behaviors are increasingly popular, with group seminar meeting attendance increasing 43 percent from 2014 to 2015. One-on-one was even more popular, with the number of such meetings increasing 152 percent.

Instant Insights /

7 best practices to boost employee retirement plan participation

More From HR Executive

Related Stories

Recommended For You