Auto-Enrollment's Little-Known Benefit: Better Participation by Blacks and Hispanics 

Plan sponsors and participants both benefit when sponsors automate features of their 401(k) plans. As you might expect, auto-enrollment boosts employee participation. This is particularly effective with black and Hispanic employees, according to a study conducted by the Vanguard Group.

401(k) Auto-Enrollment: Participation May Rise by 30%

Who wouldn't like to boost plan enrollment by 30%?

This kind of gain is possible, according to a key finding from "Diversity and defined contribution plans: The role of automatic plan features."

"Participation rates under automatic enrollment rise from 57% to 94% for blacks and from 67% to 95% for Hispanics, eliminating most group differences."

"Group differences" refers to research showing lower savings rates by blacks and Hispanics when compared with whites and Asians. It's not clear why this gap exists. It may be due to factors other than race and ethnicity, such as income and education, according to research cited by Vanguard.

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California Lags Much of the U.S. in 401(k) Plans for Small Employers  

Californians lead the nation in many desirable statistics. But we're not doing such a hot job of setting up 401(k) or other retirement savings plans at small employers. More than 20 states had higher rates of plan sponsorship than California in 2009, according to a U.S. Government Accountability Office (GAO) analysis in Private Pensions: Better Agency Coordination Could Help Small Employers Address Challenges to Plan Sponsorship, (March 2012).

California vs. the Nation

California's small employers fell into the next-to-lowest level of five levels of retirement savings plan sponsorship across the U.S. Only 13% of our state's small employers offered plans. Small employers were defined as companies with 100 or fewer employees.

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