Updating recent auto-enrollment research across its retirement clients, New York Life Retirement Plan Services found that over time, plans with auto-enrollment saw steady deferral increases and sustained high participation, versus the opposite in plans without auto-enrollment.

According to the New York Life study examining plans with auto-enrollment versus those without it over four years through Dec. 31, 2011, plans employing this feature achieved 93% participation in the first year of auto-enrollment and 87% after four years. By contrast, plans without auto-enrollment generated a participation rate of 37% in year one and 56% in year four. Additionally, in plans with auto-enrollment, the average participant deferral rate was 4.65% the first year and grew to 6.1% in year four. In plans without this auto feature, deferrals started high, at 7.29% in the first year, but declined to 6.77%. Essentially after four years, auto-enrolled participants' deferral rates caught up to those who self-enrolled.

"Many plan sponsors and their advisors have been looking for solid proof that auto-enrollment works, and here it is," said David Castellani, CEO of New York Life Retirement Plan Services, a leading provider of retirement solutions to U.S. corporations and unions. "Plain and simple – auto-enrollment encourages participant deferral rates.  There isn't a logical argument not to employ auto-enrollment."

New York Life's research earlier this year showed that plans auto-enrolling their participants at higher deferral rates have lower participant opt-out rates and higher participation overall.

The 2012 analysis is based on 480 plans and 800,000 participants across New York Life's retirement platform. Auto-enrollment in 401k plans was encouraged in the Pension Protection Act of 2006. The number of plans on the New York Life platform that have adopted auto-enrollment climbed to 64% as of September 30, 2012, compared with 21% in 2006.