ACA Fueled Dramatic Change for ERISA, Future Remains Uncertain
An excerpt from an article by Bloomberg BNA featuring a quote from PEI partner and co-founder Attla Toth.
By Tawny Elgatian
“The use of Automatic Enrollment and automatic escalation in DC Plans has been on the rise for several years. Plan sponsors incorporate ‘auto features’ into their plan design for numerous reasons. One main motive is to assist their workforce in achieving an adequate amount of retirement income at age 65. These features are having a big impact and the number of individuals
on track to ‘retirement readiness’ is on the rise.
One of the main reasons Plan sponsors are not initiating ‘auto features’ in their DC Plan design is added cost. Those plans offering a match on each dollar the employee contributes would face higher ‘company match fees’ by automatically enrolling eligible participants. With Healthcare reform, those same plan sponsors are evaluating and in some cases reconsidering their decision on ‘auto features.’ Some preliminary data from health care consultants project that having an employee past age 65 may be even costlier than the company match by automatically enrolling that individual into the retirement plan today.
As these assumptions on future healthcare costs become more available to retirement Committee members, more analysis will be conducted on weighing match cost today vs. future healthcare costs.”
To read the full article, as published by Bloomberg BNA, click here.