Will automatic enrollment reduce employer contributions to 401(k) plans?

Soto, Mauricio, and Barbara A. Butrica. “Will automatic enrollment reduce employer contributions to 401(k) plans?”. CRR WP 2009-33, Chestnut Hill, Mass.: Center for Retirement Research at Boston College, December 2009. http://hdl.handle.net/2345/bc-ir:104911.
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Abstract

Many employers match employee contributions to 401(k) plans. However, the employer cost of continuing this practice may increase rapidly as trends towards automatic enrollment boost employee participation. This paper examines the relationship between employer matching behavior and automatic enrollment. Using a sample of large 401(k) plans, we find that match rates are about 7 percentage points lower among firms with automatic enrollment than among those without automatic enrollment, even controlling for firm characteristics. So while autoenrollment increases the number of workers participating in private pensions, our findings suggest it might also reduce the level of pension contributions.

Title
Will automatic enrollment reduce employer contributions to 401(k) plans?
Author
Soto, Mauricio
Butrica, Barbara A.
Center
Center for Retirement Research
Genre
working paper
Date Issued
December 2009
Publisher
Center for Retirement Research at Boston College
Series Title
CRR WP
Series Number
2009-33
Persistent Link
http://hdl.handle.net/2345/bc-ir:104911
Use Restrictions
These materials are made available for use in research, teaching and private study, pursuant to U.S. Copyright Law. The user must assume full responsibility for any use of the materials, including but not limited to, infringement of copyright and publication rights of reproduced materials. Any materials used for academic research or otherwise should be fully credited with the source. The publisher or original authors may retain copyright to the materials.
Subject
Financing retirement

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