|
Fidelity Combines Auto Enrollment, Auto Increase and
Auto Default to Fidelity Freedom Funds® into Single Offering
BOSTON, February 15, 2007 - Fidelity Investments today announced that based on its own record-kept business, the number of workplace savings plans featuring Auto Enrollment in 2006 jumped 95% over the prior year. During the same period, employer adoption of Automatic Increase Programs rose 26% and the use of Fidelity Freedom Funds as a plan default increased 130%.1
Adoption rates are likely to continue to rise in the year ahead, according to a recent Fidelity poll of 400 plan sponsors who do not currently offer auto programs2. The poll revealed that 44% are considering adding auto enrollment, 27% are considering adding an automatic deferral increase feature, and 31% are considering adding lifecycle funds as a default in their 2007 workplace savings plan design.
"Our goal is to help solve working America's retirement challenge, which involves helping millions of employees take advantage of workplace savings plans that offer tax benefits, and in many cases, free money through employer contributions or matches," said Jeffrey R. (Jeff) Carney, president, Retirement Services, Fidelity Employer Services Company, the nation's largest provider of workplace retirement savings plans. "Employers are seeing that automatic plans have the ability to get more employees onto a path of greater retirement readiness, which is why plan adoption rates are growing. This is a healthy trend in the defined contribution industry - and one we strongly support."
Carney said Fidelity recommends that employers include three core auto solutions in their plans - automatic enrollment, automatic deferral increase, and automatic default into lifecycle funds. These baseline components can dramatically improve employees' chances of being financially prepared for retirement. To facilitate adoption, Fidelity offers all three solutions in a single offering. To date, approximately 40 employers have taken advantage of this solution.
"As workplace savings become the primary way that Americans save for retirement, combining auto solutions will help employers raise their employees' chances of replacing 85% or more of their pre-retirement income," Carney said. "This provides workers greater opportunity to maintain in retirement, the lifestyle they enjoyed while employed."
Together, Fidelity's three auto solutions can make it easier for participants to save as much as $15,5003 a year in their workplace savings plans. Fidelity also is testing Auto Catch-Up, a new plan feature that aims to help workers aged 50 and above - who are eligible to contribute an additional $5,000 annually to their workplace savings plan - to have this amount automatically deducted and put into their plans.
According to Fidelity record-kept data4, less than one in 10 of those eligible employees make catch-up contributions. Carney said Auto Catch-Up could be the ideal tool to help Baby Boomers take advantage of this valuable opportunity to save more for retirement.
About Fidelity Employer Services Company
Fidelity Employer Services Company provides benefits and human resources administration, talent planning, payroll solutions and stock plan services to approximately 20 million participants in the U.S. as of December 31, 2006.
About Fidelity Investments
Fidelity Investments is one of the world's largest providers of financial services, with custodied assets of more than $2.9 trillion, including managed assets of nearly $1.4 trillion as of December 31, 2006. Fidelity offers investment management, retirement planning, brokerage, and human resources and benefits outsourcing services to more than 23 million individuals and institutions as well as through 5,500 financial intermediary firms. The firm is the largest mutual fund company in the United States, the No. 1 provider of workplace retirement savings plans, the largest mutual fund supermarket and a leading online brokerage firm. For more information about Fidelity Investments, visit www.fidelity.com.
1Based on Fidelity Investments record-kept data for 2006.
2Fidelity Investments, Plan Sponsor Survey Results, 2006.
32007 annual contribution limit for individuals in a defined contribution plan.
4Fidelity Investments, Building Futures VII, 2006.
# # #
Fidelity Investments Institutional Services Company, Inc., 82 Devonshire Street, Boston, MA 02109 |
