NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

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

John Beshears, James J. Choi, David Laibson, Brigitte C. Madrian

NBER Working Paper No. 13352
Issued in August 2007
NBER Program(s):   AG   EFG   LS   PE

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.

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Document Object Identifier (DOI): 10.3386/w13352

Published: The Impact of Employer Matching on Savings Plan Participation under Automatic Enrollment, John Beshears, James J. Choi, David Laibson, Brigitte C. Madrian. in Research Findings in the Economics of Aging, Wise. 2010

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