Debate: Should Retirement Reenrollment Be Made Automatic?

Bloink: Many employees initially choose to opt out of the retirement plan.  This bill would force employees to reevaluate their decision at least once every three years, meaning that more employees would likely elect to remain enrolled in the plan once they’re more financially established–leading to higher savings rates.

Byrnes: We don’t need a law to increase awareness about the importance of retirement savings.  Employers who offer a retirement plan and an employee matching contribution should be offering employees information about their right to participate in the plan on a fairly regular basis anyway.

This new legislation would only increase the complexities that already exist in today’s qualified plan legal regime.

Bloink: An auto-reenrollment provision doesn’t have to add to the administrative burden of sponsoring a retirement plan.  Employers should be able to simply opt into the plan feature for employees, which, as the name suggests, would then occur automatically every three years.

The benefits definitely outweigh the burdens here and we shouldn’t let a minor inconvenience get in the way of a plan feature that could have significant benefits, especially for lower-earning employees who may not be focused on their retirement savings.

Byrnes: If anything, creating an auto-reenrollment provision would merely add to the administrative headache for employers who decide to sponsor retirement plans for employees.

The fact is, many small business owners don’t offer a retirement savings option for employees because of the administrative burden.  They have enough to worry about.

Making the rules more complex could deter more employers from offering plans and have an impact that’s precisely the opposite of what auto-enrollment is supposed to accomplish: by further limiting the retirement savings options for employees of small businesses.


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