When human-resources specialist Aon Hewitt surveyed representatives of at least 250 employers recently—many that encourage employees to save for retirement—only 15 percent of the respondents said they’re “satisfied” with how much money that employees save for retirement. Eighty-seven percent of those respondents say they likely will do something about it in 2017.
Automatically enrolling employees in retirement-savings plans and automatically increasing contributions by a percentage point, perhaps annually, are becoming popular strategies that employers use to help workers to save, says Rob Austin of Aon Hewitt. They also are effective at improving employees’ savings rates, says Lenny Sanicola, who is a spokesperson for World at Work, which is a human-resources association. After employees are enrolled in a plan, most of them don’t opt out, he says.
Automatic increases often come at a cost to employers, particularly with respect to matching contributions. That could prevent some companies from following through with the strategy, Austin says.