Employee enrollment in defined contribution plans hit a record high last year, according to a new report from Aon Hewitt.
Participation figures increased to an average of 78 percent in 2012, up from 75 percent in 2011, based on an Aon Hewitt survey of 140 defined contribution plans representing 3.5 million employees.
Automatic enrollment appears to be driving the participation growth.
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The study found 59 percent of employers automatically enrolling employees in DC plans, up from 34 percent in 2007.
And when automatically enrolled by their employer, 81 percent of workers will participate, almost 20 percent higher than evidenced at companies that don't automatically enroll.
Yet, despite the rising numbers, savings rate remain flat, averaging 7.3 percent of pay, the same as 2011 levels.
In fact, most workers are leaving money on the table, by not setting aside enough to take advantage of company matching dollars.
The study found only 28 percent of employees reached their company match levels. Those numbers translate to possibly tens of thousands of dollars sacrificed over a career. Although DC plan balances have recovered to pre-recession levels, these savings rates prove woefully insufficient for long-term retirement goals, experts say.
The study suggests further automation could address this issue. Combining automatic enrollment with features such as contribution escalation could help employees add to retirement savings without much effort.
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