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WINDSOR, Conn., Sept. 28, 2010 — Most employees want their contributions to their defined contribution (DC) plans escalated annually once they hit age 45, according to a new LIMRA survey.

“The message to employers is: don’t be shy about implementing an automatic escalation option in your DC plans,” said Marie Rice, corporate vice president and director of LIMRA’s Retirement Research. “Employees understand they need to boost their retirement savings and automatic escalation is a simple way to increase the amount they are saving annually.”

The online survey of over 300 consumers who participate in or have access to a DC plan found that 38 percent were automatically enrolled in their DC plans; 21 percent had automatic escalation and 16 percent had both—automatic enrollment and escalation.

When posed with the idea of an auto escalation beginning at age 45, 22 percent of employees said would like the increase to be one percent every year; however, 45 percent would want their contributions to be automatically increased by two percent or more every year. This was especially true among those who earn $75,000 or more in annual household income.

Recent LIMRA research indicates that the majority of pre-retirees (age 55-70) are ill-prepared for retirement; only 30 percent consider themselves to be very prepared for retirement.

This survey found that only 15 percent of employees increased their contribution rate in the past 12 months (excludes those enrolled in auto escalation plans). And, 42 percent of employees have never changed their DC investment line-up (especially true of 25-45 year olds). There is still a set-it-and-forget-it mentality.

Researchers found that employees who make use of automatic features are more amenable to the concept — 54 percent want the contribution increase to be two percent or more each year. But even among those who don’t currently have automatic escalation, 44 percent want the increase to be two percent or more every year, once they reach the age of 45. Only 34 percent of this group who didn’t want the employer to automatically increase the contribution rate at all.

“Clearly, employees need help getting their savings rate to the level needed to meet their retirement goals,” noted Rice. “This study shows that employees want automatic escalation to improve their retirement outlook.”


LIMRA is a worldwide research, consulting and professional development organization that helps more than 850 insurance and financial services companies in 73 countries increase their marketing and distribution effectiveness. Visit LIMRA at

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