DRS urges auto-enroll and local outreach to close retirement-savings gap for LEHI 2 members

Leah Bonham, defined contribution manager at the Department of Retirement Systems (DRS), told trustees the state's newly enabled auto-enroll option can materially raise participation in deferred-compensation plans and help close a persistent retirement-savings gap among LEHI 2 members.

"Plans with auto enroll achieve a 94% employee participation rate compared to just 64% when it's completely voluntary," Bonham said, citing Vanguard's How America Saves data and DRS experience. She explained the 2025 legislative change lets local governments adopt auto-enroll for their 457 plans, and that employers may set default contribution rates and notice windows; under DRS's state plan the typical starting rate is 3% and opt-out rates have been under 10%.

Bonham framed auto-enroll as a behavioral-design tool: it does not guarantee retirement adequacy or replace a pension, but it reduces the number of initial decisions that prevent people from saving. "Auto enroll is a behavioral design feature," she said. "You're designing to the behavior to what we see of people, but it does not guarantee retirement adequacy."

Board members asked how auto-enroll applies to existing employees, the opt-out and refund windows, and whether local employers can choose alternative default rates; DRS staff said local governments have flexibility to structure notices and contribution defaults, and that DRS typically provides a warning period and a 90-day refund window in its implementation.

Bonham urged trustees to use outreach and employer engagement as practical levers: state law now permits local plans to adopt auto-enroll, but local choices about vendors, default rates and communications shape uptake and long-term benefits.