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More participants, especially young, lower-income and minority workers, are likely to have healthier retirement savings thanks to automatic features in their retirement plans. Vanguard’s How America Saves 2014, which included data on 3.5 million participants, reports that automatic enrollment and automatic contribution rate increases continue to rise in popularity among sponsors and are improving participation and savings rates.

Automatic enrollment growth continues

More than one-third of the plans for which Vanguard provides recordkeeping had automatic enrollment by the end of 2013. Almost two-thirds of employees who participated in their 401(k) plan for the first time in 2013 were in automatic enrollment plans.

Although many auto enrollment plans applied this feature only to new hires, now half of those plans also apply it to eligible employees who were not participating.

Most (69%) of auto enrollment plans also automatically increase participants’ contribution rates each year.

The participation rate for those who were automatically enrolled was 82%, versus 65% for those who enrolled voluntarily.

Target date funds remain primary default

Nearly all auto enrollment plans offer a target date fund (TDF), other balanced fund or managed account as the default investment. Of those, 90% use a TDF.

At the end of 2013, 40% of participants invested only in an automatic investment option. Of this group, 31% invested in one TDF, 6% were in a balanced fund and 3% were in a managed account.

About 55% of all participants invested in TDFs, and nearly 56% of those investing in TDFs had their entire account in a single TDF.

Participation stayed steady

In 2013, the average plan participation rate was 76%, which was largely unchanged from recent years.

The average deferral rate was 7.0%, which has changed little over the past five years.

Roth 401(k) feature usage grew

More than half of plans had adopted a Roth 401(k) provision by the end of 2013.

In such plans, 13% of participants made Roth contributions. The usage rate has grown slowly but steadily over recent years.

Trading and loan activity was flat

Only 10% of participants traded in their accounts in 2013, which was virtually the same as the last few years.

Similarly, loan activity was unchanged in recent years. In 2013, 18% of participants had an outstanding loan, the average balance of which was $9,500.