Data & Research March 13, 2008

MassMutual Study Touts Auto Plan Benefits

A new MassMutual study finds that plans using automatic features such as enrollment are apparently not be driving away participants with their auto deferral rates.
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A MassMutual news report said that among approximately 400 plans with automatic features, those with a default rate higher than 3% have 84% participation rates compared to those defaulting at 3% or lower (72%). The study was conducted by MassMutual’s Center for Behavioral Research and written by Alison Salka, Director of Behavioral Communication and Research, MassMutual Retirement Services.

“Automatic features can help drive higher participation and savings rates, and can help participants invest appropriately,” says Elaine Sarsynski, executive vice president of MassMutual’s Retirement Services Division and chairman, president and CEO of MassMutual International LLC, in a MassMutual news release about the study. “They are becoming an extremely effective tool in this effort.”

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The paper, which discusses items plan sponsors should consider when studying auto plan features, contends the support for auto features is for a good reason.

“Automation is extremely effective in helping employees start saving, saving more, and investing appropriately,” the paper asserts. “It is an extremely effective tool to help employees accumulate sufficient retirement income. Considering that defined contribution plans have become the primary vehicle for millions of American workers, providers and employers need to take every opportunity to facilitate saving.”

Salka discusses how plan sponsors can automate enrollment, investment selection and deferral amounts and the advantages of each – coming down strongly in support of automatically increasing participants’ savings rates, for example.

“Inertia, or the tendency to do nothing, is a powerful inclination in all of us,’ Salka writes. “Historically, it’s been detrimental to retirement planning. However, it can be turned around to work for us, instead of against us. Automatic deferral increase (ADI) is an excellent example of this. “

The report can be accessed here.

Deals & People March 13, 2008

Scott to Lead Arizona Charge for 401(k) Advisors

401(k)Advisors, with $32 billion in collective assets under advisement through its Producer Services Unit, has appointed John L. Scott to the newly created position of Managing Director for Arizona.
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Scott specializes in sponsor/participant advocacy for small, mid-size, and large clients in the design of 401(k) plans. According to a press release, in his role as a fiduciary, Scott and the 401(k) Advisors team maximize retirement plan outcomes for employers and employees with substantive strategies in plan design, investment research analysis, and provider fee benchmarking.
Scott has earned the PLANSPONSOR Retirement Professional (PRP) designation, as well as the Accredited Investment Fiduciary, and “numerous certifications and licenses.’
“John Scott is ideally suited to lead our growth initiative in Arizona, an important market on many levels. He has developed significant business presence in Arizona, cultivated quality relationships with plan sponsors statewide and, along with his team, brings a fresh perspective to our vision for the future,” says Nick Della Vedova, president of 401(k) Advisors.
401(k) Advisors, headquartered in Southern California, maintains offices in the southeast, midwest and northeast to serve its institutional and private 401(k) plan sponsors.
For more information, log onto to www.401kadvisors.com.

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