Brief Does Autoenrollment Affect Employer Contributions?
Barbara Butrica, Mauricio Soto
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Automatic enrollment, a 401(k) feature that enrolls employees as soon as they become eligible, is growing in popularity because it has been shown to significantly increase pension participation rates. However, higher participation rates increase costs for employers that match employee contributions. This brief evaluates the extent to which firms adjust their 401(k) contributions to offset the higher costs associated with automatic enrollment. We find that employer match rates are 7 percentage points lower among firms with autoenrollment than among those without it, suggesting that automatic enrollment may not promote retirement savings as effectively as some advocates have claimed.
Research Areas Economic mobility and inequality Aging and retirement
Tags Economic well-being Pensions Income and wealth distribution Retirement policy
Policy Centers Income and Benefits Policy Center