"Sixty-one percent of Vanguard retirement plans that permit employee-elective deferrals had adopted automatic enrollment by the end of 2025. Among larger plans with at least 1,000 participants, adoption reached a record 79%. Plan sponsors are increasingly using higher default contribution rates. Sixty-two percent of plans with automatic enrollment defaulted employees at 4% or higher—a trend that has increased every year."
"Forty-five percent of participants increased their deferral rate during 2025, either voluntarily or through automatic annual increases, matching the record high set in 2024. Fourteen percent of participants proactively raised their payroll deferral percentages, while 8% decreased them. The proportion of participants who used professionally managed allocations reached an all-time high of 69%—up from 67% in 2024."
"Only 5% of non-advised participants made trades during 2025, matching the record low from 2024 despite spring market volatility. Participants who invested solely in target-date funds were four to five times less likely to trade than other investors. Pure TDF investors benefit from automatic age-appropriate equity allocations and ongoing rebalancing, and they also tend to trade far less often."
Automatic enrollment adoption among Vanguard retirement plans reached 61% by end of 2025, with 79% adoption among larger plans. Plan sponsors increasingly use higher default contribution rates, with 62% defaulting employees at 4% or higher. Seventy-one percent of automatic enrollment plans include annual escalation features. Forty-five percent of participants increased deferral rates in 2025, matching 2024 records. Professional investment management reached an all-time high of 69% adoption, including target-date funds, target-risk funds, and managed accounts. Trading activity remained at record lows with only 5% of non-advised participants trading, while target-date fund investors traded four to five times less frequently than other investors.
#automatic-enrollment #retirement-plan-design #target-date-funds #participant-behavior #default-contribution-rates
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