Automatic Enrollment, Employee Compensation, and Retirement Security

Brief

Automatic Enrollment, Employee Compensation, and Retirement Security

Abstract

This study uses restricted microdata from the National Compensation Survey to examine the impact of autoenrollment on employee compensation. By boosting plan participation, automatic enrollment likely increases employer costs as previously unenrolled workers receive matching retirement plan contributions. Our data shows a significant negative correlation between employer match rates and autoenrollment. We find no evidence that total costs differ between firms with and without autoenrollment or that DC costs crowd out other forms of compensation-suggesting that firms might be lowering their match rates enough to completely offset the higher costs of autoenrollment without needing to reduce other compensation costs.

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Research Area: 

Cross-Center Initiative

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