Advanced Search
MyIDEAS: Login to save this paper or follow this series

How Does 401(k) Auto-Enrollment Relate to the Employer Match and Total Compensation?

Contents:

Author Info

  • Barbara A. Butrica
  • Nadia S. Karamcheva

Abstract

Many workers eligible for 401(k) plans fail to par­ticipate and those who do participate often save too little. In response, policy experts have advocated auto-enrollment, in which employees are signed up at a default contribution rate unless they opt out. Over the past decade, a number of employers have adopted auto-enrollment, and these policies have clearly boost­ed participation. But the effect of auto-enrollment on workers’ total 401(k) saving is unclear, because it depends partly on employer decisions about plan design and worker compensation. And these deci­sions could be affected by the increase in employ­ers’ 401(k) matching contributions generated by auto-enrollment. This brief, based on a recent paper, examines the relationship between auto-enrollment and employer decisions on matching contributions and overall compensation. The discussion proceeds as follows. The first sec­tion considers why and how auto-enrollment could af­fect these decisions. The second section discusses the data used in the analysis. The third section explores whether auto-enrollment is associated with employ­ers’ use of low match rates or low default employee contribution rates. The fourth section examines whether auto-enrollment is related to lower spend­ing on non-401(k) compensation or higher spending on total compensation. The final section concludes that auto-enrollment is associated with relatively low match rates and default rates, but does not affect wag­es or total compensation. This finding suggests that firms with auto-enrollment may offset higher 401(k) participation costs by trimming their per-participant contributions.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://crr.bc.edu/briefs/how-does-401k-auto-enrollment-relate-to-the-employer-match-and-total-compensation/
Download Restriction: no

Bibliographic Info

Paper provided by Center for Retirement Research in its series Issues in Brief with number ib2013-14.

as in new window
Length: 7 pages
Date of creation: Oct 2013
Date of revision:
Handle: RePEc:crr:issbrf:ib2013-14

Contact details of provider:
Postal: Hovey House, 140 Commonwealth Avenue, Chestnut Hill, MA 02467
Phone: (617) 552-1762
Fax: (617) 552-0191
Email:
Web page: http://crr.bc.edu/
More information through EDIRC

Related research

Keywords:

This paper has been announced in the following NEP Reports:

References

No references listed on IDEAS
You can help add them by filling out this form.

Citations

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:crr:issbrf:ib2013-14. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Amy Grzybowski) or (Christopher F Baum).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.