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Research Findings in the Economics of Aging$
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David A. Wise

Print publication date: 2010

Print ISBN-13: 9780226903064

Published to Chicago Scholarship Online: February 2013

DOI: 10.7208/chicago/9780226903088.001.0001

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The Impact of Employer Matching on Savings Plan Participation under Automatic Enrollment

The Impact of Employer Matching on Savings Plan Participation under Automatic Enrollment

(p.311) 11 The Impact of Employer Matching on Savings Plan Participation under Automatic Enrollment
Research Findings in the Economics of Aging

John Beshears

James J. Choi

David Laibson

Brigitte C. Madrian

University of Chicago Press

This chapter discusses the continuing series of studies on the structural features of 401(k) plans. Companies have used a variety of approaches to encourage participation in employer sponsored savings plans. The vast majority of large firms now offer the most common approach, the provision of an employer matching contribution. Even with a match, however, savings plan participation rates are often surprisingly low, and their effect on participation is found to be relatively small. Automatic enrollment is an alternative mechanism for increasing savings plan participation. All of the companies in which automatic enrollment has been studied to date have also offered an employer matching contribution. The study disentangles the effects of matching and automatic enrollment in two ways. The first is to study a large firm with automatic enrollment that replaced its employer match with a noncontingent employer contribution to the plan, thereby eliminating the incentive that was provided by the match. The second approach is to pool the participation data from nine firms, all with automatic enrollment, but with varying matching provisions.

Keywords:   automatic enrollment, 401(k) plans, employer, company

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