New research from Bank of America Merrill Lynch shows that when employers present employees with an easy, one-click option to enroll in or make a contribution change to their 401(k) plan during the annual health benefits process, the result is significant increases in 401(k) participation – either through new employees signing up to contribute or through current employees increasing their contributions.

In 2010, positive savings actions among active plan participants reached record levels, according to the data.

Nearly 398,000 employees changed their retirement plan elections in the fourth quarter of 2010 in connection with the annual health care open enrolment period, an increase of 11% over 2009.

Of all participants who took some type of action in connection with the annual health care open enrolment period, 93% took a positive action (started or increased contributions, compared to 85% during 2009.

Seven percent took a negative action (stopped or decreased contributions), compared to 15% during 2009.

Kevin Crain, head of institutional client relationships for Bank of America Merrill Lynch says that this approach works well for organizations that aren’t in love, for whatever reason, with the idea of auto-enrolment or auto-escalation.

As well, it offers employers the opportunity to redefine their health benefits open enrolment period to include financial benefits and “to communicate to employees to think about their overall wellness,” says Crain.

The technology is embedded within the health care open enrolment system so employees don’t have to exit the system and log on to a new one to enroll in, or make contribution changes to, their 401(k).

"Technologically, it’s very easy for us to do this," says Crain, adding that while employers are often concerned they will have to rewrite their health care enrolment technology or that this feature will cost too much to implement, neither is true.

Among Bank of America’s large clients who have implemented the feature, 401(k) plan participation has doubled.

"It’s clear that this unified process, at this time of year [during open enrolment], makes it easy for people to take action. It’s revolutionary, much like auto-enrolment was years ago," says Crain. "And when you hit them this way, it’s year after year because you do health care [enrolment] every year."

As retirement and health care benefits become increasingly intertwined, employers have an opportunity to increase employee engagement their benefits plans.

"When we think about where health care reform is headed, and you layer pension reform on top of that, the decision criteria employees will be facing going forward will be materially more complex than what they’ve had to deal with historically," says Rohail Khan, executive managing director for total benefits outsourcing with Affiliated Computer Services, a Xerox company. "And anything we can do to create ease of navigation to get them to the right place is fundamental."

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