Reference Point. Auto Solutions >33% Auto-Enrollment Stays Strong Insights. of plans have a default deferral rate of 6%

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1 T. Rowe Price Defined Contribution Plan Data As of December 31, 16 Auto-Enrollment Stays Strong Adoption of auto-solutions has been on the rise since the Pension Protection Act of 6 provided limited fiduciary cover for retirement plans, paving the path for plan sponsors to automatically enroll employees and get them saving sooner. Now, based on the data we re seeing, plan sponsors who have adopted automatic enrollment appear to be reevaluating the 3% deferral rate that has been the industry standard for 1 years. Many have increased the default to 6% or greater. >33% of plans have a default deferral rate of 6% Since 13, the number of plans with a 6% default deferral rate has doubled, with over 33% of plans offering this higher rate in 16. The majority of plan sponsors with T. Rowe Price offer a maximum 6% company match. Some plan sponsors might be raising the default deferral rate in order to correspond with a 6% company match. If some plans are tying default deferrals to the company match, the move could appeal to non-savers. According to a recent EBRI study, the majority of non-savers (73%) who do not contribute to a defined contribution plan say they would be more likely to save if their employers provided a match, and about two-thirds of workers would be receptive to a default deferral rate of 3% or 6%. 1 PARTICIPATION HITS 1-YEAR HIGH The increases also hint at the success plan sponsors have experienced through auto-enrollment. The 16 plan-weighted participation rate of 77.4% was a 1-year high. Participation rates for older participants especially increased over the past decade: 16 Insights Over 33% of plans with auto-enrollment have a default deferral rate of 6%. Participation in the auto-increase service is 66% for plans that automatically enroll participants in the service, compared with 12% for plans that do not automatically enroll participants in the service. AUTO-INCREASE PUSHES PARTICIPANTS TO SAVINGS GOALS Participants contributed an average of 8% on a pretax basis in 16, slightly more than half of a 15% target savings rate. Raising the plan s default deferral rate can be an important step but usually not enough to encourage participants to reach the 15% target. One strategy for boosting deferral rates is automatically enrolling participants in auto-increase, a service that raises the amount participants are contributing by a little bit each year. In plans that: Automatically enroll participants in auto-increase, participation in this savings feature is 66%. Participants tend to be less likely to opt out of the service. Offer auto-increase but do not automatically enroll participants, participation is 12%. Participants are less likely to opt in to a voluntary savings feature. Ages 5 59: up three percentage points Ages 64: up four percentage points Ages 65 69: up six percentage points Want to learn more? Contact your T. Rowe Price representative. Visit troweprice.com/referencepoint 1

2 AUTOBOOST SERVICE IS A LESSER KNOWN ALTERNATIVE Despite proven success, many plan sponsors do not automatically enroll participants in auto-increase, perhaps because of concern that participants are not monitoring their accounts closely enough to realize their contributions are increasing. A possible alternative is T. Rowe Price s AutoBoost Service, which allows plan sponsors to make a one-time increase of deferral percentages below a target amount. Once the plan adopts the AutoBoost service, participants are given the opportunity to opt out of the one-time increase within a specified period of time. 66% automatic enrollment 12% voluntary enrollment 1 Source: EBRI Issue Brief, March 17. Potential Strategies To Consider Add auto-enrollment to get participants saving early. Maximize participants savings potential through opt-out auto-increase service. Use the AutoBoost service to increase low savers deferral percentage one time. Visit troweprice.com/referencepoint 2

3 No. 1 AUTOMATIC ENROLLMENT DESIGN TRENDS Default auto-enrollment (AE) rate Percent of Plans Not Offering AE.2% 56.1% 52.8% 48.7% 48.9% 45.5% 1% % % % % % or more Default auto-increase (AI) rate Percent of Plans Not Offering AI 36.7% 36.5% 32.2% 3.% 3.7% 28.5% 1% % Default investment Target date investment 95.5% 95.5% 95.5% 96.% 95.9% 96.% Other investment* * Other investments could include balanced, money market, or stable value funds. Note: Results for auto-enrollment and auto-increase are based on those plans that offer the features. The percentage of plans with a default deferral rate of 6% or greater was nearly on par with the 3% default deferral rate in 16 (33.2% and 34.3%, respectively). No. 2 PARTICIPATION IN OTHER AUTOMATED SERVICES Auto-Reenrollment Plan Participation 3% 3% 3% 5% 5% 7% 8% 1% 12% Success Rate Auto-Restart Plan Participation Success Rate Auto-Rebalance Plan Participation 88% Employee Participation 1 Note: The success rate is used to define how successful the one-time event was in maintaining participation when offering the service to employeees. Employee participation for auto-rebalance conveys actual employee adoption of the service. Overall, plan sponsor adoption of automated plan design solutions continues to trend positively, while participant adoption of those solutions still lags. Visit troweprice.com/referencepoint 3

4 No. 3 DEFAULT DEFERRAL RATE FOR AUTO-ENROLLMENT PLANS % 34.3% 31.7% % 11.4% 1 4.6% 2.% 1% 2% 3% 4% 5% 6%.6%.9% 7% 8% DEFAULT AUTO-ENROLLMENT RATE In 16, plan sponsors began to close the gap between those setting a 3% versus 6% default deferral rate. No. 4 PERCENTAGE OF PLANS ADOPTING AUTO-INCREASE AND AUTO-ENROLLMENT 8% 67.8% 7.% 69.3% 71.5% 63.3% 63.5% 51.3% 51.1% 54.5% 47.2% 43.9% 39.8% Auto-Increase Auto-Enrollment The percentage of eligible plans using auto-increase and auto-enrollment increased in 16 at 71.5% and 54.5%, respectively. Visit troweprice.com/referencepoint 4

5 No. 5 8% PLAN ADOPTION TYPES COMPARISON FOR AUTO-INCREASE 66% 63% 61% 61% 34% 37% 39% 39% Auto-Increase Plans Using Opt-Out Auto-Increase Plans Using Opt-In No. 6 8% PARTICIPANT ADOPTION RATE BASED ON AUTO-INCREASE ADOPTION METHOD 69% 66% 65% 66% 1% 11% 11% 11% 12% Opt-Out Adoption Method Used Opt-In Adoption Method Used Use of auto-increase increased by 54 percentage points when participants were asked to opt out. Most plans offer auto-increases as a voluntary option (the opt-in method), while fewer plans automatically enroll participants in auto-increases (the opt-out method). Visit troweprice.com/referencepoint 5

6 No. 7 PARTICIPATION RATES 8% 7.2% 73.2% 66.1% 73.5% 68.1% 72.9% 68.3% 72.6% 66.2% 74.5% 68.% 75.8% 69.5% 76.% 69.9% 74.% 66.5% 77.4% 68.3%.9% Plan Weighted Participant Weighted No. 8 PARTICIPATION COMPARISON BETWEEN AUTO-ENROLLMENT AND NON-AUTO-ENROLLMENT PLANS 1% 87.3% 86.% 87.8% 88.4% % 48.7% 47.6% 46.2% Plans With Auto-Enrollment Plans Without Auto-Enrollment Participation rates continue to be strongly tied to the adoption of auto-enrollment, with participation percentage points higher in plans with auto-enrollment than in those without it. Visit troweprice.com/referencepoint 6

7 No. 9 PARTICIPATION RATE COMPARISON BY AGE PARTICIPANT WEIGHTED 1% 89.1% 9.1% 9.9% 9.2% 84.7% 87.3% 88.4% % 76.3% 49.6% 53.9% 58.1% 58.4% 52.8% 46.2% 38.1% 28.% 3.6% < TRP Total Rate for Plans With Auto-Enrollment Rate for Plans Without Auto-Enrollment Participation by those in their prime working years (ages 3 to ) was more than 3 percentage points higher for participants in auto-enrollment plans than for those in non-auto-enrollment plans. Visit troweprice.com/referencepoint 7

8 No. 1 PARTICIPATION RATE (PARTICIPANT WEIGHTED) BY AGE < TRP Total 31.6% % 14 Overall, participant-weighted participation rates 15 including all age groups rebounded in 16, with the 16 overall rate now at 68.3%. Visit troweprice.com/referencepoint 8

9 No. 11 1% PARTICIPATION RATES BREAKDOWN BY PLAN ASSETS % 74.4% 8.8% 83.7% 73.% 81.2% 71.2% 54.4% 55.7% 59.8% <$5M $5M $5M $5M $M $M $1B $1B+ Plan Weighted Participant Weighted No. 12 PARTICIPATION RATES BREAKDOWN BY PLAN PARTICIPANT COUNT 8% 76.1% 79.2% 78.7% 67.6% 63.6% 7.5% <1K 1K 5K >5K Plan Weighted Participant Weighted Visit troweprice.com/referencepoint 9

10 Methodology Unless otherwise noted, all data included in this report are drawn from the following sources: Data are based on the large-market, full-service universe TRP Total of T. Rowe Price Retirement Plan Services, Inc., retirement plans (1(k) and 457 plans), consisting of 642 plans and over 1.6 million participants. Auto-enrollment, auto-increase, and default deferral rate results are based on participants of large-market, full-service 1(k) and 457 plans who were automatically enrolled in their plan during 16. Trend results are based on findings at the calendar year-end from Auto-Reenrollment An automatic reenrollment for participants who opted not to participate in their plan. This is run on-demand and could occur about once a year. Auto-Restart For participants who were contributing to their plan and have taken a hardship, once the suspension period is over, participants will have their contributions automatically restarted unless they opt out. Auto-Rebalance Provides participants with the tools they need to maintain a consistent investment strategy. If they are not investing 1% of their account in a diversified fund, auto-rebalance will automatically rebalance their account on a periodic basis (i.e., quarterly or annually). Participation rates by age are participant weighted (total number of participants divided by the total number eligible to participate). Participant-weighted year-over-year participation rate averages are calculated by dividing the number of participants by the number eligible to participate. The plan-weighted year-over-year participation rate average is the sum of plan-level averages divided by the number of plans. The data are based on any participants eligible to make contributions during the period. Participation results are based on all contributions. Participation rates by age are participant weighted (total number of participants divided by the total number eligible to participate). Copyright 17, T. Rowe Price Investment Services, Inc., Distributor. All rights reserved. T. Rowe Price, Invest with Confidence, and the bighorn sheep design are collectively and/or apart, trademarks of T. Rowe Price Group, Inc. AutoBoost is a trademark of T.Rowe Price Group, Inc. C1TCEGS Visit troweprice.com/referencepoint 1