Trust boosts 401(k) participation, study finds

Add financial literacy and trust in financial institutions to the factors that increase 401(k) participation rates. A study released today by the Center for Retirement Research at Boston College found that financial literacy reduces both the proportion of non-joiners in voluntary 401(k) plans and the proportion of quitters in automatic enrollment plans. "Trust appears to be very important in influencing savings behavior in automatic enrollment plans, with participants more likely to opt out if they lack a fundamental trust of financial institutions," the report said. "Both financial literacy and trust appear to have more sizeable marginal effects than do those from income."