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Plan Sponsor Council of America Report: 2017 Annual Survey of Profit Sharing and 401(k) Plans

The Executive Director of PSCA, Jack Towarnicky, addressed a workshop at the April NAPA
401(k) Summit, reporting on the findings of their 2017 survey focusing on the impacts of autoenrollment
and auto-escalation features.

Towarnicky reported that auto-enrollments have virtually doubled since implementation –
rising to 63% in 2016, from 32% in 2007. However, participation has held steady at
approximately 85%. Although 60% of DC plans use automatic features, 42% use
nondiscrimination safe harbors. He stated that clearly, while workers are saving, not many are
saving enough. A possible cause for the 85% participation rate, according to the survey, is that
85% of plans that implemented auto-enrollments limit this to new hires.

Additional survey results found that plans with a default deferral over 3%, rose to over 53% in
2016, from 32% in 2011, and over 73% of plans now include an auto-escalation feature.

The ASPPA article of April 18, 2018, indicated that this workshop used an instant polling
smartphone-based app to measure the adoption of auto features and Roth contribution
defaults by attendees’ clients, showing the results immediately. Questions and responses were:

Percentage of your clients who have adopted one or more automatic features:
None 6%
1-24% 43%
25-49% 31%
50-74% 11%
75-99% 8%
100% 0%

For your clients who have adopted automatic enrollment, what is the mode or most frequent
default contribution percentage?
<3% 3%
3 57%
4% 15%
5% 13%
6% 10%
>6% 3%

For your clients who have adopted automatic enrollment, how many use a Roth 401(k)
contribution default (not pre-tax)?
90+% None
75-89% 3%
50-74% None
25-49% None
10-24% 3%
1-9% 7%
None 87%

Doug Prince, CEO of ProCourse Fiduciary Advisors, LLC, who co-moderated this workshop
indicated that he believes auto-enrollment has caused a lack of properly executed beneficiary
designations following a participant’s death. He suggested that “auto-beneficiary designation”
might be an issue to address next. Towarnicky added that a default solution could work if no
valid beneficiary designation is on file.