However, the online poll from LIMRA found 45% would want their contributions to be automatically increased by 2% or more every year. This was especially true among those who earn $75,000 or more in annual household income, according to a LIMRA press release.
The survey found of more than 300 respondents who participate in or have access to a DC plan, 38% were automatically enrolled in their DC plans; 21% have automatic escalation and 16% have both automatic enrollment and escalation.
The press release said employees who make use of automatic features are more amenable to the concept of automatic escalation beginning at age 45 — 54% want the contribution increase to be 2% or more each year. But even among those who don’t currently have automatic escalation, 44% want the increase to be 2% or more every year. Only 34% of this group do not want their employer to automatically increase their contribution rate at all.
“The message to employers is: don’t be shy about implementing an automatic escalation option in your DC plans,” said Marie Rice, Corporate Vice President and Director of LIMRA’s Retirement Research. “Employees understand they need to boost their retirement savings and automatic escalation is a simple way to increase the amount they are saving annually.”
LIMRA also said its recent research indicates that the majority of pre-retirees (age 55-70) are ill-prepared for retirement; only 30% consider themselves to be very prepared for retirement. Only 15% of employees increased their contribution rate in the past 12 months (excludes those enrolled in auto escalation plans), and 42% of employees have never changed their DC investment line-up (especially true of 25-45 year olds).