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MissionSquare Research Institute Finds Substantial Expansion of Auto Enrollment, But Auto Escalation Lags

October 24, 2023

A new report from MissionSquare Research Institute finds adoption of automatic enrollment features in state and local government defined contribution (DC) retirement plans has expanded substantially during the past 15 years, with 17 states and the District of Columbia requiring or permitting some form of auto-enrollment. But few state and local governments have adopted automatic escalation, as government officials may be hesitant to move forward without explicit statutory authority. In the private sector, however, automatic enrollment is becoming a standard practice, with two-thirds of DC retirement plans incorporating automatic escalation.

These findings are outlined in a new report, Automatic Enrollment and Automatic Escalation in State and Local Government Defined Contribution Plans, prepared by Paula Sanford, PhD, Senior Public Service Associate at the University of Georgia, and released during National Retirement Security Month. The report offers automatic enrollment and escalation case studies for public sector retirement plans in California, Georgia, Kentucky, Missouri, Oregon, and Virginia.

Read the full research report.

Deanna J. Santana, the Acting Chief Executive Officer and President of MissionSquare Retirement, emphasized the financial struggles faced by public service employees. "Relying solely on their pension for financial security during retirement is no longer a viable option. Incorporating automatic enrollment and escalation features into public sector DC retirement plans now is imperative. Supplementing their pensions with DC plan savings helps public service employees attain financial security after a career dedicated to serving our communities."

Santana highlighted that jurisdictions already implementing automatic enrollment and escalation features are witnessing considerable success in augmenting employees' retirement savings. “This success is particularly critical given the upward trend in retirement costs and life expectancy.”

The report is released during National Retirement Security Month with the aim of providing government leaders with valuable insights from case studies and findings to help them replicate the success of automatic enrollment and escalation in their jurisdictions.

Automatic enrollment and automatic escalation are design features applied to DC plans for the purpose of increasing participants’ retirement savings. With automatic enrollment, employers or plan sponsors automatically enroll employees in a DC plan at a default contribution rate and in a default investment. Under automatic escalation, employees participating in a DC plan have contributions automatically increased at regular intervals, such as annually or biennially, until a predetermined maximum contribution level has been reached. Participation in both design features remains voluntary, in that the employee retains the right to leave the plan or change contributions.

The state and local jurisdiction case studies in the report offer the following five lessons learned:

  • Automatic features improve retirement savings. Automatic enrollment and automatic escalation increase the number of employees who contribute to their deferred compensation plans and, therefore, their retirement savings. Many public plans have used these features for over a decade without significant implementation challenges or negative employee feedback. And as more private employers offer auto features, implementation in the public sector helps employers stay competitive in workforce recruitment and retention.
  • Understanding the financial, economic, cultural, and political environment is critical to creating a savings feature that will stand the test of time. Governments and plan administrators should consider wages, unemployment, turnover, tenure, the agency’s finances, political viewpoints, and expected retirement income sources to design savings features.
  • Data tracking provides important information about the impact of savings features. Data helps determine if changes should be made to default rates or the impact of any reforms. Also, plan participation and contribution rates data help design education tools that will resonate with employees.
  • Combining government matches with automatic features appears to keep employees in the plans and at higher contribution rates. Matches incentivize employee savings and help automatically enrolled employees sustain contributions amounts.
  • Education is a critical component for keeping employees in a deferred compensation plan and increasing contribution rates. Successful deferred compensation systems and administrators have invested resources in developing savings and retirement information that explains why and how much employees need to save, which reduces employee resistance to automatic features and deters them form opting out.

MissionSquare Research Institute promotes excellence in state and local government and other public service organizations to attract and retain talented employees. The organization identifies leading practices and conducts research on retirement plans, health and wellness benefits, workforce demographics and skill set needs, labor force development, and topics facing the not-for-profit industry and education sector. MissionSquare Research Institute brings together leaders and respected researchers. More information and access to research and publications are available at

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