Pitfalls of Passive Enrollment

With resources stretched thin, many plan sponsors utilize a passive enrollment. This is essentially a process whereby employees essentially rubber stamp the benefits they already receive. It simplifies the process for both the employee and employer but it also can serve to cement existing enrollment which may not be beneficial for the employee.

We frequently see plans that have adopted auto-enrollment but have only instituted this for new hires. This can leave decades of employees who have been with you the longest out of the plan (or not part of the plans escalation clause). While a plan that goes back and re-enrolls the entire workforce will have the benefit of bringing everyone into the plan except those who opt out, for some employees the auto-enroll rate may be sub-optimal.

This is where a coordinated active enrollment can compliment a plan that has auto features available. It allows the retirement plan advisor to engage employees and educate them on the other advisory tools available as well as capture those employees who don’t make the meeting or are otherwise pre-occupied. This also allows the H.R team to shine while they get to address the issues they are hearing about the most from employees. #401k #403b #QPRetirement