Vanguard Says 61% of DC Plans Use Auto-Enrollment as Participation Reaches 86%
Updated
Updated · The 401(k) Specialist · Jun 16
Vanguard Says 61% of DC Plans Use Auto-Enrollment as Participation Reaches 86%
3 articles · Updated · The 401(k) Specialist · Jun 16
Summary
Vanguard’s 2025 How America Saves report found automatic features kept lifting retirement outcomes, with participant balances up 13% and overall participation at 86%, up 5 percentage points from 2017.
61% of Vanguard-administered defined contribution plans now use auto-enrollment, including 79% of plans with at least 1,000 participants; plans with auto-enrollment posted 94% participation versus 64% for voluntary plans.
Automatic escalation is reinforcing that shift: more than 70% of auto-enrollment plans raised deferral rates annually, 62% default workers at 4% or higher, and about one-third now default at 6%.
During 2025 tariff-driven market volatility, participants largely stayed put—only 1% of target-date fund investors made an exchange and 5% traded—while 45% increased deferrals, two-thirds through annual escalation.
Vanguard said SECURE 2.0 provisions such as auto-portability for balances of $7,000 or less should further expand adoption, even as hardship withdrawals remain a pressure point, with 6% of eligible participants taking one.
As 401(k)s welcome riskier assets like crypto, are savers being steered into a high-fee trap?
Automatic savings are rising, but so are hardship withdrawals. Is the system solving one problem while ignoring another?
How Auto-Enrollment and Managed Allocations Drove Record DC Plan Participation and Savings in 2025-2026
Overview
This report highlights how advanced plan design features—especially automatic enrollment and professionally managed allocations—have transformed participation and savings in defined contribution (DC) plans. Drawing on insights from Vanguard’s extensive research, it shows that plan sponsors are increasingly using these strategies to help employees save more effectively and invest wisely. The growing adoption of automatic enrollment has driven participation rates to record highs, while professionally managed options ensure smarter investment choices. Together, these innovations are reshaping retirement readiness for millions of American workers, demonstrating the powerful impact of thoughtful plan design on long-term financial security.