Plan sponsors finally have statistical proof that automatic enrollment can narrow the persistent racial gap in retirement savings. Unfortunately, other stats from the same research show that auto enrollment can widen the gap.

In a new study of seven large clients by Vanguard Group, those that automatically put new hires into a 401(k) plan increased the participation rate by more than 60 percent among black employees — to 94 percent from 57 percent — and by more than 40 percent among Latino employees, to 95 percent from 67 percent. As a result, the two groups statistically caught up with the rates of white and Asian employees.

“This is another reason for introducing automatic enrollment if you haven’t offered it already,” says Stephen Utkus, head of Vanguard’s Center for Retirement Research and a co-author of the study.

The catch is that the companies allocated an average of just 3.2 percent of employees’ paychecks to the 401(k)s, a typical amount in these automatic programs but far less than retirement experts say is needed. After enrollment, black and Latino employees pretty much stayed at the default level. However, white and Asian employees increased their allocations, widening the racial disparity again.

“Automatic enrollment is a good step,” says Pamela Hess, director of retirement research at consulting firm Aon Hewitt. “But it’s not going to bridge the gap completely.”

“With automatic enrollment, differences in participation and savings are much reduced,” says Annamaria Lusardi, a professor of accounting and economics at the George Washington University School of Business. “But it might not eventually be the best way to help minorities.”

Thus, according to Lusardi, employers will have to take more steps, perhaps coupled with education starting in elementary school.

For years surveys by Aon Hewitt and others have shown that blacks and Latinos participate in 401(k)s at lower rates and save significantly less than whites and Asians in their plans. This holds up even after controlling for factors like age, income and job tenure. For instance, in the Vanguard study the participation rates for whites and Asians without auto enrollment were 73 percent and 90 percent, respectively — way above the 57 percent and 67 percent of blacks and Latinos.

Making matters worse, the latter two groups were more likely to reduce their nest eggs through withdrawals and loans, according to a survey of 3 million employees at 57 large companies that Hewitt Associates (as it was then named) and Ariel Investments conducted in 2007.