Between the end of 2013 and the end of last year, both the number of defined-contribution plans using auto-enrollment (36%) and individual participation directly resulting from it (80%) increased by two percentage points. That's based on data from 1,900 retirement plans nationwide.

However, the typical participant account balance dropped by 6%, or nearly $2,000 during that time. Why? The study shows that nearly two-thirds of plan sponsors start auto-enrollees off by contributing 3% of their pay or less. The trend is generating controversy in both retirement and benefits circles. Many investment professionals recommend that employees put away a significantly higher percentage of their salary, say 12-15%. Others feel that getting employees enrolled and starting the ball rolling toward retirement is what counts.

What’s more, the Vanguard study reveals that, with employer matches and other sweeteners, typical workers are investing 9.5% of their pay, even if they start off at 3%. Vanguard’s researchers point out that, among new hires, the participation rate approaches 90% of total employees, though some workers do invariably drop out. And, the data show that 68% of plans using auto enrollment increased their employee contributions by 1% last year.

But while plan sponsors are warming to the idea of annual contribution raises, some employers worry about the costs associated with auto-enrollment and higher employer matches.

Read the full article from Workforce.com.