Get Smart
Kiplinger's Personal Finance (06/02) Vol. 56, No. 6 p.26

Many employees fail to join or increase their 401(k) contributions because the process is too complicated, but there are several companies interested in developing programs to change that trend. Two economists from the University of Chicago and UCLA developed "Smart," a plan allowing employees to agree to contribute 2 percent of their raise to their 401(k), but the plan runs under the assumption that the pay increase is above the 2 percent mark. During a field test of the plan, the average savings rate for participants increased from 3.5 percent to 11.6 percent. Philips Electronics North hired Vanguard to employ the Smart program in two of its divisions--about 30 percent of the targeted workers have signed on.

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