Forced savings Yea or Nay!!

[eliza61]

So I'm in between meetings and all heck is breaking loose here.

My company has a very funny department. All they do is send out surveys, we get "surveyed" all year long. Anyhoo last year they did a survey about our pension and 401K benefit and found out that we had a very low participation rate even though it's a pretty good program. company matches first 6% dollar for dollar and if you contribute 6% continuously for 12 months on the 13th month they give you an extra 3%.

Still I think we only have some thing like a 38% participation rate. Go figure.

Anyway just had a meeting and starting 4/15/14 the default will be automatic participation at 3%.

Meaning starting with the April 15th payroll every one will have 3% of their check automatically go into the 401K.

YOU CAN OPT OUT. but in order to do so you have to write a notarized letter requesting to opt out. So before you had to sign up to particpate but next year everyone will participate and you have to sign up to get out.

As I said, folks are a bit "salty". Now I definitely recognize that in todays financial environment every dollar is needed and I'm definitely bias. I participate in any program that gives me free money and 9% (6% match plus an extra 3%) is way too much dough for me to leave on the table.

but why is this a bad thing?

Thoughts?

ps. at the meaning they statatisn said that one reason given alot for not particpating was "kept forgetting to sign up"

Folks are walking around complaining like some one short-sheeted the Pope.

 

[Marionnette]

So I'm in between meetings and all heck is breaking loose here.

My company has a very funny department. All they do is send out surveys, we get "surveyed" all year long. Anyhoo last year they did a survey about our pension and 401K benefit and found out that we had a very low participation rate even though it's a pretty good program. company matches first 6% dollar for dollar and if you contribute 6% continuously for 12 months on the 13th month they give you an extra 3%.

Still I think we only have some thing like a 38% participation rate. Go figure.

Anyway just had a meeting and starting 4/15/14 the default will be automatic participation at 3%.

Meaning starting with the April 15th payroll every one will have 3% of their check automatically go into the 401K.

YOU CAN OPT OUT. but in order to do so you have to write a notarized letter requesting to opt out. So before you had to sign up to particpate but next year everyone will participate and you have to sign up to get out.

As I said, folks are a bit "salty". Now I definitely recognize that in todays financial environment every dollar is needed and I'm definitely bias. I participate in any program that gives me free money and 9% (6% match plus an extra 3%) is way too much dough for me to leave on the table.

but why is this a bad thing?

Thoughts?

ps. at the meaning they statatisn said that one reason given alot for not particpating was "kept forgetting to sign up"

Folks are walking around complaining like some one short-sheeted the Pope.

I'm against anything that forces others to do something just because someone else considers it to be a good idea. Requiring an employee to jump through hoops to opt out of having their paycheck raided would be one of those things that I would be against.

I understand why socking money away in a workplace 401K can be a good thing when there are matching funds to be had. But there could be plenty of reasons why people don't do it aside from "I forgot". No one wants to admit (even in an anonymous survey) that they cannot afford to have that kind of money taken out every paycheck. Or they feel that they would rather have control over how their retirement money is invested, perhaps putting some in a ROTH IRA so that they aren't getting shelled with taxes when they withdraw it in retirement. Or it could simply be that they are like me and they don't want or need a Big Brother telling them what to do.

 

[eliza61]

Thanks Marionette!
Always appreciate a different view.
LOL, I totally admit that I'm a big proponent because you don't have to twist my arm to give me an extra 9%. For a lot of folks here, that's could be an extra 8 or 9K.

Appreciate it.

 

[DisneyCowgirl]

A lot of employers I am fmailiar with do the automatic enrollment, but none that I am aware of require a notarized anything to opt out. It seems just requiring that you opt out using the same method you would have otherwise opted in would be sufficient. Getting something notarized is a pain, and seems totally unnecessary in this instance.

 

[Gumbo4x4]

A lot of companies pay lower wages and higher benefits. Others require you to contribute toward your pension plan. I don't really see this as any different. Plus, you CAN opt out. But with the company kicking in $9 for my $6, why on earth would you opt out?

 

[eliza61]

A lot of employers I am fmailiar with do the automatic enrollment, but none that I am aware of require a notarized anything to opt out. It seems just requiring that you opt out using the same method you would have otherwise opted in would be sufficient. Getting something notarized is a pain, and seems totally unnecessary in this instance.

good point. Not sure. I do know that as of right now, if a person wanted to take a withdrawal (not a loan) and they were married they would have to have the withdrawal request signed by spouse and notorized. Not sure why that is, as I've never taken a hardship withdrawal.

 

[eliza61]

A lot of companies pay lower wages and higher benefits. Others require you to contribute toward your pension plan. I don't really see this as any different. Plus, you CAN opt out. But with the company kicking in $9 for my $6, why on earth would you opt out?

probably why I stopped paying attention. I hate buying something if I know I have a 0.50c coupon at home.

 

[MomToOne]

Many companies have gone to an automatic enrollment with an opt out option these days. Studies have shown that people will often tend towards the "inertia" option on things - so in the old case, they wouldn't opt into the 401k because that was what took no effort on their part. When you make the inertia option the opt-out option, then more people will participate.

Having to get your opt-out notarized does seem a bit odd, though - and usually its a form you fill out, not a letter you have to write. Seems like in this case your company may be ratchetting the non-inertia option a bit overboard. Is the company planning to make notaries readily available for a period of time? (Where I work we have notaries everywhere due to the nature of our business, so getting something notarized takes very little effort - not sure if maybe you have something similar so the company thinks it's no big deal?)

 

[luvmy3]

I'm against anything that forces others to do something just because someone else considers it to be a good idea. Requiring an employee to jump through hoops to opt out of having their paycheck raided would be one of those things that I would be against.

I understand why socking money away in a workplace 401K can be a good thing when there are matching funds to be had. But there could be plenty of reasons why people don't do it aside from "I forgot". No one wants to admit (even in an anonymous survey) that they cannot afford to have that kind of money taken out every paycheck. Or they feel that they would rather have control over how their retirement money is invested, perhaps putting some in a ROTH IRA so that they aren't getting shelled with taxes when they withdraw it in retirement. Or it could simply be that they are like me and they don't want or need a Big Brother telling them what to do.

 

[MomToOne]

good point. Not sure. I do know that as of right now, if a person wanted to take a withdrawal (not a loan) and they were married they would have to have the withdrawal request signed by spouse and notorized. Not sure why that is, as I've never taken a hardship withdrawal.

Because 401k's are community property in many cases - you don't want one spouse to be able to clean it out without the other being aware and consenting.

 

[aprilchem]

I can't see why it would be a bad idea if you can opt out. The only thing that would upset me would be if they forced you to contribute above the company match, but it seems like they're not doing that. Personally, I don't contribute a penny above my company's match to my work retirement account - everything above that goes into a Roth IRA because I think it's a better long-term deal. We are also auto-enrolled but can opt out (without a notarized letter) here.

 

[mchllevns]

Sometimes it's just lack of knowledge (or age) on the part of the employee...after I had been employed for over 10 years I went to a company that offered a similar benefit...I'd never had a retirement plan before and really did pay too much attention to that part of the benefits package. Fortunately, our HR person made it a point to discuss the option with me so that I didn't miss the sign up deadline. It was a great benefit!!

 

[crisi]

As long as they have notaries available to help you opt out, I don't have a problem with it.

As long as we are going to hear people blame someone else ("no one told me," "no one taught me!" Why didn't they have this class, why didn't they explain this when I was twenty, or when I took the job.), I'm fine with the people who get the blame taking what steps they can to deflect it.

I don't think you can have a single sign in period with a 401k (I could be wrong), so people who end up opted in will be able to opt back out. They'll end up with a small amount in a 401k that they can't get to without penalty for not paying attention, but it isn't likely to ruin their lives.

 

[pryncess527]

Personally, I like it when just about any program is structured so that the "smart" choice is also the easiest choice, so I support an opt-out system for things like matched retirement contributions. The notarized letter part may be a bit much, they could make the opt-out easier.

 

[PrincessJo]

I don't like it when someone else tries to tell me what is best for me. How in the world do they know what is best for ME and MY family?

Thank goodness people can still opt out... for now. Just wait... it's a slippery slope.

 

[bettymae1121]

Personally, I like it when just about any program is structured so that the "smart" choice is also the easiest choice, so I support an opt-out system for things like matched retirement contributions. The notarized letter part may be a bit much, they could make the opt-out easier.

Ditto. Unless it's easy to get something notarized at the place of employment I think that's going way overboard. But I have no issue with making it an "opt out" situation. If a person can't afford to contribute, or has other saving options they'd rather do instead then they'll have no problem "remembering" to fill out the form to opt out.

My company switched to an "opt out" system a few years ago and no one complained (and with our rumor mill, complaints would have flying around the building like crazy if it had been any sort of issue). Pretty sure people would have been pretty annoyed if it had to be notarized though, since I don't think we have many (if any?) notaries employed.

 

[Cheshire Figment]

good point. Not sure. I do know that as of right now, if a person wanted to take a withdrawal (not a loan) and they were married they would have to have the withdrawal request signed by spouse and notorized. Not sure why that is, as I've never taken a hardship withdrawal.

Federal law requires this.

 

[eliza61]

I don't like it when someone else tries to tell me what is best for me. How in the world do they know what is best for ME and MY family?

Thank goodness people can still opt out... for now. Just wait... it's a slippery slope.

They don't, but remember a company is not just about "one person". They have 58,000 employees that they have to offer benefits to. So the question can't be what's best for one person. I don't think they are trying to tell some one what's best for their family, I think they are simply trying to come up with a solution to a very real problem, especially in light of the fact that they are ending the "defined" pension.
Hey considering Forbes magazine says that most 65 year olds have between 65K-100K in the 401K's any help to boost that may not be such a bad thing..


Thanks all, my job has good points and bad points. One of the bad points is that they always seem to make us jump through "hoops". LOl. We have an opportunity to get 25 bucks a month reduction in our health insurance premiums. whew, you should see what we had to do to get that.

Oh well, they did send out an email saying there were quite a number of notaries on each site (most of the senior admin. Assistance are notaries) and we have a credit union on site also. It's calmed the natives down a bit.

Thanks for the opinions.

 

[crisi]

I don't like it when someone else tries to tell me what is best for me. How in the world do they know what is best for ME and MY family?

Thank goodness people can still opt out... for now. Just wait... it's a slippery slope.

Logically, if by making you opt out they are telling you that having a 401k is the best choice for your family, aren't they telling you that NOT having a 401k is the best choice if they make you opt in? Aren't they, by that logic, kinda screwed either way?

 

[3boymthr]

Because 401k's are community property in many cases - you don't want one spouse to be able to clean it out without the other being aware and consenting.

Which is exactly why some people don't want to participate but don't want anyone to know why they don't want to participate. If you know your marriage is on the rocks but your just waiting for x, y or z to happen before taking the plunge into divorce land would you sock away money in a 401(k) where your possibly soon to be ex could get half or would you do like my cousin's spouse did and sock it away in cans then hide it at a relative's house and you get to keep it all.