Guo, RuofeiBeshears, JohnLaibson, DavidChoi, James J.Madrian, Brigitte2025-11-142025-01Beshears, John, Ruofei Guo, David Laibson, Brigitte C. Madrian, and James J. Choi. "Automatic Enrollment with a 12% Default Contribution Rate." Journal of Pension Economics & Finance 24, no. 1 (January 2025): 152–182.1474-7472https://dash.harvard.edu/handle/1/42720669We study a retirement savings plan with a default contribution rate of 12% of income, which is much higher than previously studied defaults. Twenty-five percent of employees had not opted out of this default 12 months after hire; a literature review finds that the corresponding fraction in plans with lower defaults is approximately one-half. Because only contributions above 12% were matched by the employer, 12% was likely to be a suboptimal contribution rate for employees. Employees who remained at the 12% default contribution rate had average income that was approximately one-third lower than would be predicted from the relationship between salaries and contribution rates among employees who were not at 12%. Defaults may influence low-income employees more strongly in part because these employees face higher psychological barriers to active decision making.Englishautomatic enrollmentdefault contribution rateretirement planretirement savingsArticlehttps://doi.org/10.1017/S1474747223000148