GLOBAL - Sponsor defined contribution (DC) retirement plans are widely adopting automatic enrollment together with other automatic features designed to boost employee participation and limit the number of decisions employees need to make, a survey by Mercer revealed.
The consultant - which surveyed plans from 33 countries representing more than $440bn in assets under management - found one-third of the employers surveyed offer automatic enrollment, one-third automatic contribution escalation and over one-fifth automatic rebalancing features.
Among the approximately 80% of companies that have a default investment option, lifecycle funds are the most common default instrument, used by 67% of those respondents.
"Automatic plan features have become prevalent in some countries and are spreading quickly to other countries to combat employee inertia and to fulfill plan sponsors' desires to further increase participation rates," said Mercer global DC consulting head Barbara Marder.
Mercer said the US and Latin America were leading the implementation of these features, with Asia-Pacific, Europe and the UK lagging. Mercer added it expected auto-pilot features to become the norm in most countries over time.
According to the survey, the most prevalent investment options are balanced funds, lifecycle funds and fixed-interest gilt/bond funds.
Two-thirds of respondents require a minimum level of employee contribution in order to qualify for a core company contribution. In addition, 69% require members to make an additional contribution in order to get the employer match.
Forty-four per cent of the multinationals surveyed said their DC plans were managed and overseen by either global committees or individuals in the corporate head office. Another 13% centralize DC plan management or oversight at the regional level.
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