Experts with Bank of America Merrill Lynch were cheered by their latest 401(k) Wellness Scorecard, the results of which were made live this morning. As the economy continues its shaky recovery and the stock market progressed in the first quarter of 2013 toward its new record highs, Bank of America Merrill Lynch officials say retirement plans are gaining ground.
More than 26,000 employees were automatically enrolled in Bank of America Merrill Lynch 401(k) plans in the first three months of 2013, the scorecard reports, and only 7% opted out; among plans without auto enrollment, less than one-fifth keep their opt out rates below 10%. Additionally, the company reports 207 plans with auto-increase features, up 9.5% from the end of last year. Participants in those plans also rose, by 9.3%, from 115,703 to 126,537.
Kevin Crain, head of institutional retirement and benefits services for Bank of America Merrill Lynch, tells EBN “there’s lots of good news” in this scorecard, and that it also points the way to how plans can be improved.
“I think this reinforces the importance of the private retirement system for employee’s financial security,” Crain says. “When you have more than 200,000 plan participants and, of those who took an action on their plan, two-thirds of those were a positive action, that’s a good, good thing.”
From January to March, 87,377 employees started saving in a 401(k) plan and 96,235 increased their already active 401(k) contribution rate. Crain says the research continues to support the idea that modest increases in automatic deferral rates don’t seriously damage participation.
“We are seeing far more sponsors with automatic enrollment increase their automatic deferral rate,” he says. “We study opt-out rates [and] as we’ve seen the deferrals go up to 4, 5, 6%, the opt-out rates have not increased.”
One of the areas where plans could probably still improve is with more financial advice. Those who receive counseling on their 401(k) are far more likely to make sound decisions and to feel more secure in their finances, an area other research says is lacking.
“We still strongly believe that the plans need to be made easier for people to engage, to be engaged, and to get helpful advice,” Crain says. “There are proven solutions that are there, and if we all want to protect these retirement systems in this country, which I think we need to, and prove that they work, we and the plan sponsors themselves have a responsibility to go work, and there are ways to get that work done.”
Pick up a copy of July’s EBN to read more about the 401(k) scorecard and the current state of retirement financial security.
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