By Lisa Barron
While one of the biggest trends in 401(k) plans is auto-enrollment, making it easier for employees to take part in their company retirement plans, many employers are taking matters even further.
Spurred by data that shows many older workers take on too much risk and that younger employees may take too little risk in the funds they choose, companies are simply re-enrolling their plan participants in new funds in their own choice, usually target-date funds based on age and expected retirement date.
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The move is catching on with “leading edge” employers, said Jean Young of Vanguard’s Center for Retirement Research.
In fact, two-thirds of plans joining Vanguard’s Retirement Plan Access, a 401(k) designed for smaller plans, are re-enrolling employees into new funds.
And workers don’t seem to mind. “Those are really easy opportunities to change peoples’ behavior,” said Robyn Credico of consulting firm Towers Watson. “We haven’t seen anyone get angry.”
The employees are notified about the re-enrollment and do have the ability to opt out.
Still, the vast majority of employers that re-enroll do so only when they are switching retirement plan providers.
In the meantime, there’s some good news for workers left to their own devices.
Vanguard said that more than two-thirds of employees who are auto-enrolled in a 401(k) are also automatically increasing their annual contribution rates, vastly improving the outlook for their retirement income security.
Originally published on BenefitsPro.com