Will Automatic Enrollment Reduce Employer Contributions to 401(k) Plans?

Mauricio Soto () and Barbara Butrica

Working Papers, Center for Retirement Research at Boston College from Center for Retirement Research

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.

Pages: 36 pages
Date: 2009-12, Revised 2009-12
New Economics Papers: this item is included in nep-lab
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:crr:crrwps:wp2009-33

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