Short Answer 
Employers can boost retirement savings participation through automatic enrollment, where employees are enrolled by default and contribute a preset percentage. Employees can opt out or alter their contribution rates, maintaining control over their savings while simplifying the enrollment process, which leads to higher participation rates, particularly among new employees.
Step 1: Automatic Enrollment
Employers can enhance retirement savings participation by using automatic enrollment in a retirement savings plan. This process means that employees are signed up by default, typically with a preset contribution rate, such as 3% of their salary. This method takes advantage of employees’ default bias, which is their inclination to stick with pre-set options rather than actively opting out.
Step 2: Employee Options
While employees are automatically enrolled, they retain the right to control their contributions. They can either opt-out of the plan entirely or change their contribution rate if they prefer to save more or less. This flexibility ensures that employees still have a say in their retirement savings, which can increase overall satisfaction with the plan.
Step 3: Positive Outcomes
This strategy is particularly effective for improving participation rates, especially among newer employees. By simplifying the process of enrollment, employers can achieve significant increases in overall participation. In contrast, other methods like offering complex savings courses or assigning employees to specific plans can lead to choice overload, potentially decreasing engagement and participation rates.