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we need to reframe the 401(k) opportunity
as a journey with a destination. the journey,
of course, is the passage from working life to

adequate retirement.

cent of people select organ donation.
In Austria, you still have choice. You

can still decide whether you want to
donate your organs or not. But when

you receive your driving license, you
check the box only if you do not want enroll?” Employers should realize that vendors who have the technology to

to donate your organs. only 1 percent the second option means that there is support these two programs without
of people check the box—so 99 percent strong likelihood that the employee will increasing your cost in time or money.

of the people in Austria that have a end up not saving for retirement.
other employers worry about the
driving license are organ donors.
Automatic enrollment, on the other increased fiduciary risk if something

In both cases, the majority of people hand, would get the employee started goes wrong or if they make a mistake.
do not check the box. It takes effort, it on his or her journey. Automatic escala- There are, however, options available to

takes a little thought, and doing noth- tion would allow the plan to fly higher employers for a third-party fiduciary to
ing is common. our typical default by automatically increasing employee take on the oversight and accountabil-

setting is to do nothing. If this is the deferrals, saving more. In most cases, ity for these activities. The employer’s
case, then why do we make the default without automatic escalation, em- administrative duties consist only of

setting in most 401(k) programs that ployees do not elect to increase their sending a payroll file to the vendor and
employees must opt in? We need to savings rate. This means that they find letting the fiduciary do all the work.

reframe the 401(k) so that employees themselves in a holding pattern, never Finally, consider the fear of forc-
benefit from the retirement opportu- reaching their desired destination.
ing employees into a savings program

nity—instead of being left out.
Most employers say they do not use that they do not want. Employers are
To begin: We need to reframe the the auto enrollment and auto escalation already forcing people into a retire-

401(k) opportunity as a journey with
option for three reasons: cost, admin- ment decision—not to join—because it
a destination. The journey, of course,
istration, and a desire not to force their is human nature not to take action and

is the passage from working life to employees into a retirement decision.
check the box. In most cases, these are
adequate retirement. In theory, to make The fear of higher cost may be the the employees who need the most help

this journey successfully the employee greatest challenge, but it is not insur- and are being left out in the cold. Em-
should enroll in his/her company’s mountable. As a business owner, look ployers need to ask themselves which

retirement program early in his/her into the future and imagine a work- option is better for the employee—who
career. The employee then gradually force that cannot retire without savings still has the option to opt out if he or

increases savings to an adequate level, and continues to work out of need. she does not want to participate.
invests wisely, and enjoys his/her life Your health care costs spiral upward, You can do the right thing and pay

savings during retirement—and is not your worker compensation costs rise, a little more now to help provide your
worried about running out of money absenteeism goes up—and before you employees with a legitimate chance at

during retirement. But the reality is know it, your employee costs are off retirement—or you can pay a lot more
that for this to happen, the employee the charts and your production per in employee costs in the future. The

must act against his or her nature by employee drops.
decision is yours.
enrolling in the retirement plan—that Administration definitely could be a

is, by checking the box.
problem. In the past, keeping track of Roger Chandler is the Senior Vice President of Business
The question employers need to
automatic enrollment and automatic Development at TAG Resources. He has more than 15 years

ask? “Is it better for the employee to be escalation of deferrals was challeng- of experience in sales and operational support of 401(k)
automatically enrolled, or is it better to ing and time-consuming. But times programs. Learn more at www.tagresources.com.

make the employee actively take steps to
have changed. There are a number of

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