Facts & Resources

Bank of America Merrill Lynch Reveals Seven Best Practices to Increase Employee Workplace Benefit Plan Participation and Contribution Rates

Thursday, June 9, 2016 8:30 am EDT


New York
"This includes delivering a multichannel financial wellness program and offering a wide variety of investment types to appeal to employees and their diverse needs."

Companies are embracing and promoting a culture that supports the financial well-being of their workers, as employees responded with increasing enrollment, participation and contributions over the last year, according to data released today from the Bank of America Merrill Lynch Plan Wellness Scorecard.1 Last year, total contributions increased by 14 percent, and the number of employees with balances grew 16 percent. A trend, the number of employees who took a positive savings action, either enrolling or increasing contributions to a plan, grew by 82 percent from 2012 to 2015.

The semiannual report, which reveals trends in employee behaviors and employers’ adoption of plan features, shows that in 2015, employee engagement was on the rise as both pretax – including 401(k) and health savings accounts (HSAs) – and Roth 401(k) accounts grew. Roth accounts saw particularly strong growth; the number of contributors increased 38 percent, and total contributions increased 32 percent.

Enrollment in health savings accounts (HSAs) also continues to grow year over year, as they offer employees the opportunity to save for health care expenses. In 2015, the number of HSAs increased 47 percent, with total assets under management increasing 47 percent and average cash balances increasing 42 percent.

“Growth across almost all employee participation metrics is very promising. Partnering with employers, we see the impact that strategic plan design and employee engagement can have on improving retirement outcomes,” said Gary DeMaio, head of Defined Contribution Products, Bank of America Merrill Lynch.

Employee engagement best practices

The report findings revealed best practices from companies employing successful plan design features that drove employee participation and contributions rates.

  1. Enroll all employees: An increasing number of plans are automatically enrolling all employees, rather than only new hires. In 2015, automatic enrollment of all eligible employees increased 24 percent.

  2. Simplify enrollment: Express Enrollment, our simplified enrollment solution that reduces the upfront decisions employees must make, grew by 40 percent in 2015. Express Enrollment showed an employee enrollment rate of 76 percent, compared to 53 percent that enrolled through a traditional method.

  3. Combine automatic features: 47 percent of plans now use automatic enrollment, of which, 85 percent combine automatic enrollment with an automatic increase in contribution. This combined approach to automatic features is up 39 percent in 2015 compared to 2014.

  4. Increase default contribution rates: Automatic enrollment plans with higher default contribution rates saw higher rates of participation, reaching as high as 88 percent for plans with a 10 percent default rate in 2015. 

  5. Diversify investment offering with Roth 401(k): The Roth option appeals to employees of all ages, especially those in their 40s and younger, who may be looking to diversify their retirement savings from a tax perspective. Fifty-two percent of Roth contributors also made pretax contributions.

  6. Engage via mobile: Benefits OnLine® – a holistic and mobile site that helps employees make changes and updates to their plans online – continues to experience robust growth in mobile usage. In 2015, unique visitors to the mobile site increased 57 percent.

  7. Offer in-person guidance: Workplace seminars to discuss plan features and provide broader financial education to support optimal savings behaviors continue to grow in popularity. Group seminar meeting attendance increased 43 percent from 2014 to 2015, with the number of one-on-one meetings increasing 152 percent.

“Employers are seeking tools that not only provide personalized advice and guidance for employees, but also offer the convenience, flexibility and ease needed to attract and retain employees throughout the benefit plan process,” said Kim Kasin, financial guidance executive at Bank of America Merrill Lynch. “This includes delivering a multichannel financial wellness program and offering a wide variety of investment types to appeal to employees and their diverse needs.”

For more findings from the Bank of America Merrill Lynch Plan Wellness Scorecard and actionable advice for plan sponsors, click here.

1 The Plan Wellness Scorecard monitors plan participants’ behavior and sponsors’ adoption of new plan design features and services in our proprietary 401(k) business, which comprises $155 billion in total client plan assets and 2.98 million total plan participants with positive balances as of December 31, 2015. Source: Bank of America Merrill Lynch’s Retirement and Benefit Plan Services (Retirement and Benefit Plan Services) is part of Global Wealth and Investment Management (GWIM), the wealth and investment management division of Bank of America Corporation. As of June 30, 2015, Retirement and Benefit Plan Services had client balances of $136.3 billion. Client Balances consists of assets under management, client brokerage assets and deposits of GWIM retirement plan participants held at Bank of America, N.A. and affiliated banks.


Bank of America
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