The 2006 Pension Protection Act (PPA) and the Department of Labor’s (DOL’s) fee disclosure requirements issued in 2011 and 2012 tied as the top-ranking event influencing the management of defined contribution (DC) plans, according to Callan’s 2016 Defined Contribution Trends report.
The PPA set the stage for wide adoption of automatic features in DC plans and made Roth contributions permanently available for DC plan participants, among other things. Callan says the influence of the PPA has resulted in 61% of plan sponsors offering auto enrollment in their DC plans, and four out of five of those plan sponsors also auto escalate employee deferrals.
In addition, Callan’s survey found one in five plan sponsors have engaged in a re-enrollment and 62% have Roth designated accounts in their plans.
PLANSPONSOR’s own DC Survey of thousands of plan sponsors of all sizes also finds 62% have designated Roth accounts. While it found 41% of plan sponsors overall use auto enrollment, more than 60% of large and mega plans do so. Twenty-eight percent of plan sponsors re-enrolled existing employees not participating in the plan, 13% re-enrolled existing employees participating but not at the default contribution rate, and 2% re-enrolled employees participating but not invested in the plan’s qualified default investment alternative (QDIA).
A more telling indication of the effect of the PPA, according to the PLANSPONSOR DC Survey, is that the total number of plans using auto enrollment in 2006 was just 17%.
Source: Plan Adviser