Plan Sponsors need Proactive Plan Design, Higher Auto-Enrollment and Auto-EscalationDespite the increasing adoption of automatic plan design features such as automatic enrollment and automatic escalation, J.P. Morgan findings show that overall contribution rates are generally in decline. On average, new plan entrants are contributing less overall and growing their contributions more slowly. The average auto-enrolled participant contribution rate was 4%, almost half the average contribution rate of 7.7% for non-auto-enrolled participants. Plan sponsors have a unique opportunity to help participants save more by setting rates higher, and even more importantly setting escalation programs to rise more quickly to reach 10%. Otherwise, they may find that participants are forced into the difficult game of "retirement catch up" in their 40s, 50s and 60s or risk underfunding their retirement needs.
J.P. Morgan Asset Management Finds Some Target Date Funds Overlook Critical Factors
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