2012 Hot Topics in Retirement - Aon

16 Aon Hewitt
Automatic Enrollment
Automatic enrollment has been one of the hottest retirement trends in the
past few years with the percentage of plans using the feature growing
from 24% in 2006 to 55% in 2011. While the rate of increase in automatic
enrollment is slowing, there continues to be interest in adding the feature
among employers that do not currently employ it; 33% said they are
somewhat or very likely to add automatic enrollment to new hires in 2012.
Automatic Enrollment for New Hires—Usage and Plans for 2012
Current State
Already have
55%
Don’t have
45%
(n=430)
Future Direction
Very likely 14%
Somewhat likely 19%
Somewhat unlikely 23%
Very unlikely 43%
Respondents with either a closed or frozen defined benefit plan continue to
be significantly more likely to leverage automatic enrollment. Fifty-seven percent
of employers that o�er both a defined contribution and defined benefit
plan use automatic enrollment versus 40% of employers that only provide a
defined contribution plan. Automation appears to be a tool used to help
o�set the impact of a decrease in defined benefit plan value.
The concept of also defaulting existing nonparticipants has become increasingly
scrutinized with strong success seen among new hires. However, the
popularity of “backsweeping” remains low with only 18% of plans (that used
this approach) enrolling nonparticipants in addition to new hires, by defaulting
either one time or periodically. Further, only 19% claimed to be somewhat or
very likely to do so in 2012.
Similar to previous surveys, respondents with either a closed or frozen defined
benefit plan continue to be significantly more likely to have defined contribution
plans with automatic enrollment (65%) than respondents with an open
pension plan or no pension plan (44%). Automation appears to be a tool used
to help o�set the impact of a decrease in defined benefit plan value.