Automatic (Re)Enrollment

Sponsored by Allianz Life Insurance Company of North America

Legislation was recently reintroduced in the Senate that would provide a safe harbor for reenrolling nonparticipants at least once every three years (but not less than once a year). Plans already have the ability to reenroll nonparticipants annually so we wondered what impact this legislation would have, and how well reenrollment works for those who have already implemented it. The idea behind reenrollment is that over time participants' circumstances may have changed (promotions, raises, etc.) and adding in an additional “nudge” may be helpful in getting more participants in the plan over time.

More than thirty percent of respondents stated that their organization is opposed to reenrolling participants that have already opted-out.  Twenty percent of respondents are considering it and nearly one-fourth didn’t know an option. Only 10 percent of respondents state they use it and it works well. Some respondents stated that they have done it occasionally or every few years and it is administratively burdensome and creates frustration from some employees. A few respondents stated that they don’t do a reenrollment, but they put everyone into auto escalation so anyone at 0% is bumped up to 1% unless they opt-out of escalation, which is perhaps another means to the same end. Comments follow.

• I like the proposed legislation.  Participants can always keep opting out if they wish.
• I was unaware that it was an option, but I also believe that we would probably be opposed to reenrolling those who have opted out...
• I'm in support of automatic enrollment/reenrollment legislation. It boosts savings and makes it easier on employees that do not act because of inertia.
• If a participant has already opted out, and has the option to change that at anytime, then the plan (and legislation) should not interfere with their desire to not participate - regardless of how long it's been since they declined to participate.
• Opposed to auto enrollment, too costly for the business.
• Safe harbor status would be nice.  But we haven't considered annual re-enrollment to be an aggressive or risky action.  In our context, we've only been re-enrolling participants who are eligible for the company match.
• The legislation is fine so long as re-enrollment remains the plan sponsor's choice on how to administer their plans.
• We ask non-participants to reaffirm opt-out annually.
• We prefer to continue to message participants about the value of enrolling themselves as opposed to enacting for them.  We do maintain a fairly high participation rate so we're satisfied that this is a meaningful approach to maintaining enrollment.
• Why bother with a senate proclamation.  If you announced it, couldn't you just do a campaign to do that?
• Will read up on it as we are very interested in this feature.
• Every few years we will complete a reenrollment with participants having an option to opt out.
• Implementing in 2024
• We are not opposed, but we are also not considering it.
• Not yet but maybe should consider
• Plan currently does not have automatic enrollment
• This doesn't apply to our plan since all eligible participants are enrolled and get the safe harbor amount applied per paycheck throughout the year.
• Wasn't aware it was an option, but equally, automatic enrollment or reenrollment is something we are opposed to in general. We don't know our employees' personal situations, whether they live paycheck-to-paycheck. We feel it would be unfair to automatically enroll them into a 401(k) account and for them to suddenly have a chunk of money disappear from their paycheck; switching the onus on them to opt-out rather than opt-in. We prefer to offer guidance and education as to why joining the 401(k) plan is a good thing, but ultimately, its their money, their choice.
• We do not have auto enrollment with our high turnover rate.
• We don't auto-reenroll, but we use the auto-escalation feature, which boosts their savings rate from 0% to 1%, and 1% again each year after.
• We have auto escalate which also addresses those who have chosen to opt out and it works well to capture those who originally opted out.
• We reenrolled non-participants one time and we received a lot of opposition.
• Yes, every few years, but it is time-consuming and labor-intensive to put everything in place, and it also causes employee relations issues for some employees who resent having to opt-out after they have already done it once or twice. In some cases, I question whether it is worth the effort.