The impact of employer matching on savings plan participation under automatic enrollment
By: John Beshears ... [et al.]
Contributors: Beshears, John.; National Bureau of Economic Research.
Series: NBER working paper series -- no. 13352.; Working paper series (National Bureau of Economic Research) -- working paper no. 13352.
Publisher: National Bureau of Economic Research
Published: 2007
Place of publication: Cambridge, Mass
Language: eng
Number of pages: 24
Subjects: Retirement income -- Decision making -- Mathematical models; Individual retirement accounts -- Decision making -- Mathematical models; Saving and investment -- Decision making -- Mathematical models
Description: Existing 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 non-contingent employer contribution. This firm's experience suggests that non-contingent employer contributions only weakly crowd out employee participation.
Notes: "August 2007"

Includes bibliographical references (p. 16-17).

Also available in PDF from the NBER world wide web site (www.nber.org).