Automatic enrolment: The power of the default
20 March 2018 | Investing
Automatic enrolment in defined contribution plans is a well-known strategy that improves both employee participation and overall saving rates. Plan sponsors can use various methods to boost those benefits even further.
In a Vanguard research paper, Automatic enrolment: The power of the default, authors Jeffrey W. Clark and Jean A. Young analyze the impact of employers’ plan design choices and the role inertia plays in employee saving decisions. They find that stronger default designs can help improve retirement outcomes. Although this paper is U.S. research using U.S. data, it is of broad interest to those in the pensions and retirement industry.