Nevin's Data "Points"

Automatic enrollment has long been touted – and proven – to be an effective way to overcome retirement savings inertia in 401(k) plans. But these days automatic enrollment plan design seems to be suffering from its own inertia. For all the good press and positive results that automatic enrollment gets, one might well expect that every plan would embrace it. And yet today, nearly a decade after the passage of the Pension Protection Act, many still don’t. What’s wrong with automatic enrollment? Everybody doesn’t do it. Only the most naïve industry professional ever assumed that the Pension Protection Act of 2006, even with all its incentives and encouragement (and not a few barrier removals) would transform a voluntary savings system into something that all employers everywhere would feel comfortable – or would be able to afford – automatically enrolling every eligible worker. And yet, more than a decade later, only about two-thirds of the largest employers have embraced automati...

Earlier this week, the Wall Street Journal’s Anne Tergesen wrote a story titled “Mixed bag for auto-enrollment.” Citing data presented at last week’s EBRI policy forum,¹ the article  claimed “employees who are automatically enrolled in their workplace savings plans save less than those who sign up on their own initiative.” She then proceeded to cite Aon Hewitt data presented at the policy forum that illustrated how workers at various salary levels at plans that offered automatic enrollment saved at a lower rate, on average, than workers at the same salary levels at plans that didn’t offer automatic enrollment. The article then went on to note that “The data confirms an analysis EBRI performed for The Wall Street Journal in 2011.” Well, not exactly. In a response to an article titled “401(k) Law Suppresses Saving for Retirement” that Tergesen wrote in 2011,  EBRI Research Director Jack VanDerhei challenged the premise behind the headline of that article, explainin...

As the nation continues to grapple with fiscal challenges, the subject of so-called “tax expenditures,” (the amount of tax breaks accorded various programs) has attracted a great deal of attention. Critics of the current tax preferences structure for work place retirement plans have questioned the efficacy of those preferences relative to the savings produced. In that vein, a recent study¹ examined the experience of the Danish pension system to consider the relative impact of government retirement-savings tax preferences on savings behaviors, as well as the impacts on savings patterns of a mandate that required all Danish citizens to contribute 1 percent of their earnings to a retirement savings account from 1998 until 2003. In explaining their rationale for drawing on the Danish pension experience, the study’s authors described that nation’s pension system as “broadly similar in structure” to that in the United States and other developed countries, in that it has individual acco...