Fred Barstein, CEO & Founder, TPSU/TRAU/401kTV with Carrie, HR Manager, Coviance
Implementing automatic enrollment in an employer-sponsored retirement plan can offer numerous benefits for both employers and employees. One of the primary advantages is increased retirement savings participation among employees. Automatic enrollment streamlines the onboarding process, making it easier for employees to join the retirement plan without the need for extensive paperwork or active decision-making. As a result, more employees are likely to enroll, enhancing overall plan participation rates.
Additionally, automatic enrollment can contribute to improved retirement readiness. By enrolling employees automatically, employers help build a culture of savings, fostering financial well-being among their workforces. Increased participation often leads to higher overall savings levels, ensuring that employees are better positioned for a secure retirement. This can also have positive implications for employee satisfaction and retention, as a robust retirement benefit is a valuable component of a comprehensive compensation package.
However, while automatic enrollment increases participation, employers should be aware that employees may not necessarily contribute at an optimal savings rate. Employers should carefully consider the default contribution rate and provide clear communication to employees about the importance of reviewing and adjusting their contributions to better suit their retirement needs. Additionally, some employees may prefer to opt out for various reasons, such as current financial constraints or alternative savings strategies. Striking the right balance and addressing potential drawbacks through effective communication and flexibility can maximize the positive impact of automatic enrollment.
At the conclusion of The Plan Sponsor University (TPSU) Fiduciary Education Program held on the campus of Drake University, in Des Moines, Fred Barstein, CEO of TPSU and 401kTV chats with Carrie, the HR manager at Coviance, a software company in Des Moines. Fred explores the successful implementation of automatic enrollment in their retirement plan. Carrie shares that they initiated automatic enrollment in 2021 to instill a savings habit among employees, resulting in an impressive 100% participation rate. The leadership credits Carrie for educating employees on the importance of saving for retirement. Notably, no one opted out, highlighting the significant impact of automatic enrollment.
Read the Full Transcript Here:
Fred Barstein:
Greetings. This is Fred Barstein, CEO and founder of TPSU and 401kTV. I’m here on the campus of Drake University in Des Moines, here with Carrie. Welcome, Carrie.
Carrie:
Thank you.
Fred Barstein:
Okay if we ask you a few questions?
Carrie:
Of course.
Fred Barstein:
Before we start, tell us a little bit about yourself.
Carrie:
I am the HR manager at Coviance. It’s a software company here in Des Moines.
Fred Barstein:
Right. How many employees do you have?
Carrie:
We have 70 employees.
Fred Barstein:
70 employees.
One of the things you talked about was automatic enrollment. Can you tell us about what you did?
Carrie:
Yes. We set up automatic enrollment with the initiation of our plan back in 2021, and decided that auto enrollment was the way to go just to get people in the habit of saving.
Fred Barstein:
What were the results?
Carrie:
Right now, we currently have 100% participation.
Fred Barstein:
100%.
Carrie:
Yes.
Fred Barstein:
That’s inspiring. How do people and your employees, but also the company feel about having that kind of participation rate?
Carrie:
I shared this information with our leadership and to hear that… And they also put a lot of credit on me for giving employees the education and just the know-how and how to do that and what they need to do if they don’t want to do it as well.
Fred Barstein:
Right. No one opted out?
Carrie:
No.
Fred Barstein:
They’re going to… Incredible benefit for people not even thinking about it
Carrie:
Right. Also, we put a lot of education around, most of our employees are younger and them just realizing what their potential is for retirement.
Fred Barstein:
Final question. A couple of things you learned here, the takeaways?
Carrie:
Compliance is always something that sits in the back of my mind, and so there was some good takeaways from that. Just hearing how other companies administer their 401k plans was interesting to hear.
Fred Barstein:
Hearing from your peers.
Carrie:
Yeah, yeah.
Fred Barstein:
Very good. Well, thanks for your time.
Thank you for watching 401kTV. Please stay tuned.
