A report card on the globalization of automatic features to defined contribution plans shows that such plans are gaining international acceptance, according to a 33-country survey of DC plan sponsors by Mercer.

In June 2009, the HR consulting firm conducted a Web-based poll of DC plan sponsors from 33 countries representing Europe, the United Kingdom, Asia Pacific, Latin America, the United States, and Canada.

The results show that one-third of the employers offer auto-enrollment, one-third auto-escalation and over one-fifth auto-rebalancing features. In addition, for 80% of companies that offer a default investment option, lifecycle funds are the most common default choice (67%).

Analysts found, however, that the United States and Latin America are leading the implementation of auto-plan features, while Asia-Pacific, Europe and the UK are gradually coming around to the features.

Employers around the world expressed different reasons for sponsoring DC plans. For example, 76% of sponsors note their top reason for providing a DC plan is to remain competitive in attracting and retaining employees, while 56% desire to encourage workers’ responsibility in saving for retirement and 53% want to offer adequate benefits at retirement, reports Mercer.

The uptick in automatic retirement plans across the globe stems from DC plan sponsors moving away from paternalism and embracing the role of a facilitator for employees to save for retirement, according to the survey. Nearly 55% of respondents cited this reason for using auto-features. Additionally, survey respondents adopt auto-plan options to increase participation rates by their employees, with 74% of employers setting target participation rates of 80% to 100%.  However, only half achieved a participation rate of 80% or more.

“Auto-plan features have become prevalent in some countries and are spreading quickly to other countries to combat employee inertia and to fulfill plan sponsors’ desires to further increase participation rates” says Barbara Marder, who heads Mercer’s global DC consulting and the retirement international consulting businesses.