The Power of Auto Features and CITs in Retirement Plan Design

In what may come as no surprise to those in the retirement ecosystem, retirement plan design has once again been shown to have a positive impact on savings behavior. According to Bank of America’s latest Workplace Benefits survey, half of employees nearing retirement wish they’d started saving earlier, and a third regret not taking full advantage of their employer’s 401(k) match. These regrets are avoidable, and thanks to smarter plan design and evolving investment structures, they’re becoming less common.

The Behavioral Economics Behind Retirement Savings

The Participant Pulse data confirms the power of auto-enrollment and auto-escalation. Plans that automatically enroll participants see participation rates as high as 93%. When auto-escalation is layered in, more employees reach contribution levels that unlock the full employer match.

These features are more than administrative conveniences; they’re grounded in behavioral economics. They help employees overcome inertia and build better savings habits without requiring perfect financial discipline.

As Jason Levy, Senior Counsel at Great Gray Trust Company, puts it:

Fewer of the next generations’ retirees should have these regrets—and that’s a testament to the value of behavioral economics and collective investment trusts in modern 401(k) and other defined contribution retirement plans.”

CITs Expand Access and Lower Costs

At the same time, collective investment trusts (CITs) are no longer just for mega-sized plans. Thanks to declining or eliminated investment minimums, CITs are now accessible to small and mid-sized plans—bringing institutional pricing to a broader swath of American workers.

In a recent PLANSPONSOR article, Jason Levy emphasized the long-term impact of this shift. “Even seemingly small savings, when compounded over the course of a career, can result in hundreds of thousands of dollars of additional retirement income. And those savings aren’t coming at the expense of stripping regulations or investor protections.” This is why CITs are becoming the primary investment vehicle for target date funds. Levy further explains: “CITs often deliver meaningful cost savings without compromising on regulatory oversight or investor protections. According to the Morningstar 2025 Retirement Plan Landscape Report, CITs average 23.9 basis points for active management compared to 60.1 basis points for mutual funds.”

CITs are regulated under an overlapping body of laws, including banking laws and trust law, and, when CITs include ERISA investors, the CITs are subject to ERISA and its fiduciary duties described by courts as “the highest known to the law.” This makes CITs a compelling option for plan sponsors seeking both cost efficiency and robust participant protections.

The Prospect of Strengthened Outcomes 

The transition to CITs, and the continued adoption of behavioral nudges like auto-enrollment, isn’t just about changing investment vehicles or participant behaviors. It’s about changing how we think about institutional investing.

As highlighted in “The Psychology of CITs,” inspired by Morgan Housel’s The Psychology of Money, the biggest advantage in finance isn’t necessarily found in better spreadsheets, it’s found in better behaviors. Advisors who help plan sponsors embrace this mindset shift are not just improving plan design, they’re helping reshape retirement outcomes for the better.