MADISON, Wis. — Credit union employees have another option to turn to with their 401(k) plans.
CUNA Mutual Group has introduced the Automatic 401(k) Retirement Program for credit union employees, which has two options: automatic enrollment only, and automatic enrollment with automatic savings increases. Under both options, employers select the default investment account allocation for their employees and the contribution percentage. When selecting the default investment account allocation, credit unions can choose one or any combination of the investment account options offered in the plan. With the automatic savings increase feature, employers also set the annual contribution percentage plus the amount of the annual increase.
CUNA Mutual has also introduced three Lifestyle Allocation Investment Accounts that credit unions can choose as default investment accounts for their automatic 401(k) program. Employees can choose a conservative, moderate or aggressive strategy, and all future investments are then allocated according to that strategy. Investment professionals then diversify employees’ investments based on that strategy.
Tom Eckert, senior vice president, pensions, for CUNA Mutual, said studies have shown that automatic 401(k) plans boost the rate of plan participation from a national average of about 75% of eligible employees to 85%-95%.