Majority of DC plans now offer automatic enrollment: Analysis

More employers intend to add automatic enrollment features to their 401(k) and other defined contribution plans, according to a survey.

The Aon Hewitt Inc. survey of 210 midsize to large employers found that 57% of their defined contribution plans offered an automatic enrollment feature in 2010, up sharply from 24% in 2006 when Congress passed legislation that pre-empted any state laws that could have interfered with such programs.

Under automatic enrollment, employees who don’t respond to participation notices are enrolled automatically in a plan unless they notify their employers that they want to opt out.

Of plans that now lack such a feature, 36% intend to add it in 2011, according to the survey, which was released Wednesday.

“Auto-enrollment is a relatively simple and effective way for companies to help workers plan for retirement—especially younger workers who may not feel the immediate pressure to save for retirement,” Pam Hess, director of retirement research with Aon Hewitt in Lincolnshire, Ill., said in a statement.

The survey also found that among employers that allow either some or all of their defined benefit participants to accrue benefits, 16% said they are likely to freeze accruals this year compared with 9% last year.

Copies of the survey are available at http://aon.mediaroom.com/index.php?s=43&item=2171.