The Impact of Employer Matching on Savings Plan Participation under Automatic Enrollment
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CitationBeshears, John, James Choi, David Laibson, and Brigitte Madrian. 2010. The impact of employer matching on savings plan participation under automatic enrollment. In Research Findings in the Economics of Aging, ed. D. Wise, 311-336. Chicago: University of Chicago Press.
AbstractExisting research has documented the large impact that automatic enrollment has on savings plan participation. All the companies examined in these studies, however, have combined automatic enrollment with an employer match. This raises a question about how effective automatic enrollment would be without a direct financial inducement
not to opt out of participation. This paper’s results suggest that the match has only a modest impact on opt-out rates. We estimate that moving from a typical matching structure—a match of 50% up to 6% of pay contributed—to no match would reduce participation under automatic enrollment at six months after plan eligibility by 5 to 11 percentage points. Our analysis includes a firm that switched from a match to a noncontingent employer contribution. This firm’s experience suggests that non-contingent employer contributions only weakly crowd out employee participation.
Citable link to this pagehttp://nrs.harvard.edu/urn-3:HUL.InstRepos:4686773
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