Middle-market sponsors of 403(b) plans haven't embraced automatic enrollment as quickly as their private-sector counterparts with 401(k) plans, but interest is growing.
In 2012, just under 25% of 403(b) plans — the nonprofit world's rough equivalent of 401(k) plans — with between 200 and 999 participants offered automatic enrollment. In contrast, nearly 46% of 401(k) plans with between 250 and 999 participants had an automatic enrollment feature, according to surveys conducted by the Plan Sponsor Council of America in Chicago.
But more 403(b) plan sponsors, especially colleges, universities and nonprofit health care systems, are considering adding automatic enrollment, said Terry Richardson, a principal with PricewaterhouseCoopers L.L.P. in Dallas.
One of those educational institutions is Seattle Pacific University in Seattle. “It is a way of increasing the likelihood that employees will have enough savings to retire,” said Don Mortenson, the university's senior vice president for planning and administration.
Yet some have offered them for years. At the eight institutions making up The Claremont Colleges, automatic enrollment was added in 2008 to their 403(b) plans “to eliminate the risk that some employees may not enroll in the plan on their own,” said Robert Bloomer, director of benefits administration with the Claremont University Consortium in Claremont, Calif.