A new Labor Department regulation is making it easier for employers to adopt automatic enrollment policies for 401(k) plans. Under automatic enrollment, employees are included in a 401(k) plan, with a deduction from their paycheck, unless they ask not to be in the plan. Currently, the default is that the employee is not in the plan, unless they request to participate. In reporting on the regulation, USA Today told readers that the increased use of automatic enrollment is expected to add between $70 billion and $134 billion. With a workforce that will average more than 150 million over this period, that comes to between $470 and $900 per worker. Since the new regulation will affect perhaps 10 percent of the workforce at some point in their career, the gain to retirement savings will average between $4,700 and $9,000 for the workers affected. It would have been useful for the article to put some context on the importance of the potential gains from this new regulation.
--Dean Baker