Pension Plan Structures before and after the Pension Protection Act of 2006

Research Report

Pension Plan Structures before and after the Pension Protection Act of 2006

Abstract

The landmark Pension Protection Act of 2006 (PPA) includes provisions to encourage employers to automatically enroll employees in defined contribution retirement plans. This study, which analyzes how pension plan structures changed after the PPA, shows that autoenrollment and employer contribution rates increased after the PPA was implemented. However, when we control for other factors, we find that the PPA itself did not directly affect autoenrollment and actually reduced the preset and default employee contribution rates plans use for automatically enrolled employees. These default contribution rates are typically lower than what employees would need to contribute to obtain the maximum employer match.

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