401k auto-enrollment and auto-escalation are less effective than hoped in boosting overall retirement savings.
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New research from the National Bureau of Economic Research found 42% of 401(k) balances are cashed out upon leaving a job (as opposed to rolled over). In addition, people leave jobs before their 401(k) match is fully vested and start news jobs at a lower savings rate than the job they left.
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The bottom line: HR has an ongoing role to play educating employees on maximizing their retirement savings while policymakers continue to search for ways to include savings incentives in law.
A new movement to expand employee stock ownership in U.S. companies is lobbying Congress to promote partial Employee Stock Ownership Plans (ESOPs) for larger companies and update ESOP requirements.
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What they’re saying: The coalition of 50 foundations, academics, and service providers such as law firms and banks called Expanding ESOPs believes expanding employee stock ownership would help ease the country’s wealth inequality.
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The big picture: As the level of retirement savings inadequacy becomes clearer, policymakers will look to expand on the progress made in the Secure Act 2.0 to address the retirement savings crisis.
