It is not often that there is an opportunity to report good news on the subject of retirement preparation. However, three studies released recently have included very positive developments in 401(k) auto participation.

Wells Fargo’s Institutional Trust Services, and BPS&M (a benefits planning division of Wells Fargo) issued their twelfth annual report on ‘Strategic Initiatives in Retirement Plans.’ (Link) Included was the information that plans using automatic enrollment for their 401(k) programs had increased from 26% of respondents  (employers) to 44% from 2006 to 2007. Human resource professionals have called this increase in one year amazing.

“The Pension Protection Act of 2006 has opened the door for employers to design plans that encourage plan participation…,” according to the study. The change from having employees ‘opt-in’ (actively sign up for a 401(k)) vs. ‘opt-out’ (they are automatically enrolled and have to take action to drop out) led to these amazing statistics above.

The Employee Benefit Research Institute estimates that auto enrollment, and auto escalation (another provision of the PPA) “will result in a significant increase of 401(k) accumulations - especially for low-income workers - compared with estimates previously determined for automatic enrollment.” (Link)

And a Harris Interactive poll, sponsored by AARP, FINRA, and Retirement Security Project (Link) measured the employee attitudes toward automatic 401(k) enrollment. Of those enrolled in a 401(k) plan, 98% either strongly or somewhat agreed that they were “..glad (their) company offers automatic enrollment.” Even for those who opted out, 79% strongly or somewhat agreed they were glad their company offered automatic enrollment.

The PPA has been described as the biggest improvement in pension legislation in many years. So, since congress takes so much criticism, it is only fitting that for a positive move, we should thank the PPA’s sponsors. They are Representatives Boehm (OH), Camp (MI), McKeon (CA), Kline (MN), and Thomas (CA).