Retirement Made Simpler—Employees Love It and It’s Great For Employers Too
By: Source: AARP.org Date Posted: 2007-12-11 08:32:15.242191-05:00
A new survey shows that workers are overwhelmingly satisfied with being automatically enrolled in their companies' 401(k) plans. And one Oregon employer - Evraz Oregon Steel Mills (EOSM) - is demonstrating the tremendous benefit this tool gives both workers and the company.
"Auto-enroll 401(k)s are proving to be a win-win solution," said AARP Oregon State Director Jerry Cohen. "They can provide much-needed retirement security for employees and serve as a valuable recruitment and retention tool for employers."
Take Wataru "Sho" Morita, manager of transportation and one of EOSM's newest employees. For him, the company's auto-enroll 401(k) with 5-percent match was an added incentive that's made a great difference in his economic security. Indicating that "in just one year, he's managed to save more than 15 years priors."
Similar positive feedback is now typical from the Portland, OR.-based steel company's 1,700 employees, says John Worcester, corporate manager of benefits and compensation.
As he explains, the company wanted to beef up its benefit package and do more to help employees save more, but "talk of financial literacy and options made eyes glaze over quickly." While EOSM had offered a traditional 401(k) in the past, only about half of the employees joined. Worcester wanted to change that statistic and make it easier for workers to understand, participate and save for retirement.
The company's solution was to implement a new option allowed by changes and enhancements to federal policy and law, and recently enhanced by Congress. This essentially entailed allowing employers the alternative of automatically enrolling workers into the 401(k) plan unless the employee actively asked to "opt out." In traditional 401(k)s, many workers who could start saving for their retirement never get around to signing up for the plan. By being automatically enrolled, with the option to back out of the plan, participation rates soar.
Since the company's implementation three years ago, they now boast a 98 percent participation rate.
A recent national survey is mirroring those results and demonstrates the value employees are finding in this new tool. The "Retirement Made Simpler" study found that 98 percent of U.S. adults currently enrolled in an automatic 401(k) plan where they work are glad their companies help them save this way. In fact, 95 percent agree that automatic enrollment has made saving for retirement easy. And 85 percent say it has helped them start saving for retirement earlier than they had planned. Only 7 percent did not participate in the retirement plan when given the chance to do so.
Retirement Made Simpler is a new coalition to help spread the word about the mutual benefits employers and employees can realize. It was jointly launched by AARP, the Financial Industry Regulatory Authority (FINRA) and the Retirement Security Project (RSP).
"AARP is committed to automatic savings programs. As the responsibility of saving for retirement falls more to the individual, it's imperative that employers and employees do all they can to enhance savings and ensure financially-secure futures," said Bill Novelli, Chief Executive Officer of AARP.
"AARP Oregon wants all Oregon employers to know about this homegrown example of how going automatic is a great way to get people started saving for a secure retirement and how it can help the company at the same time," said Cohen.
For more auto-enroll 401(k) or retirement savings information, or a copy of the Retirement Made Simpler report, e-mail or call AARP at oraarp@aarp.org or 866-554-5360 toll-free.
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