Ascensus analyzed data from its 40,000 retirement plans and 200,000 health savings accounts (HSAs) and found automatic plan design features are driving higher enrollment rates.
Plans with automatic enrollment features see an average participation rate of 78%—9% higher than participation in plans without automatic enrollment. Plans that combine automatic enrollment and automatic increase have an average participation rate of 81%.
In addition, as automatic features become more prevalent, a majority of Millennials entering the workforce are enrolled in their employer’s plan and begin saving earlier in their career. If they continue to proactively manage their savings strategy, this generation could be in a much better position to fund a comfortable retirement by the time they reach retirement age than those at retirement age today, Ascensus says.
Ascensus data also shows HSAs are favored among savers at or near retirement. Savers older than 55 account for 34% of the HSA assets on the Ascensus platform, suggesting that more savers are leveraging HSAs as a tool to increase overall retirement savings.
Other trends the analysis found include:
- Online capabilities continue to gain traction and promote smarter saving. Ninety percent of new clients onboarded in 2015 opted to enroll employees online. Additionally, online-based retirement calculators are still being used and promote better savings habits. Twenty-nine percent of participants who used the Ascensus online retirement calculator started saving immediately following its use at a 9% deferral rate.
- HSAs are becoming increasingly popular among all age groups. The number of overall HSA accounts increased 22% in 2015, with 16.7 million open accounts. Similarly, the number of assets in these accounts also rose steadily to $30.3 billion, a 16.7% increase year over year. Current projections show this growth continuing and the HSA industry reaching $50 billion in assets by 2018.
Additional trends and insights about retirement savings and HSAs, as well as college savings plans, is available on Ascensus’ newly launched website, http://pulse.ascensus.com.