Automatic Enrollment, Employee Compensation, and Retirement Security
Barbara A. Butrica
The Urban Institute
Nadia S. Karamcheva
Urban Institute; Boston College - Center for Retirement Research
November 1, 2012
Center for Retirement Research at Boston College Working Paper No. 2012-25
This study uses restricted microdata from the National Compensation Survey to examine the impact of auto enrollment on employee compensation. By boosting plan participation, automatic enrollment likely increases employer costs when previously unenrolled workers receive matching retirement plan contributions. Our data show significant negative correlation between employer match rates and automatic enrollment provision. We find no evidence that total costs differ between firms with and without automatic enrollment, and no evidence that defined contribution costs crowd out other forms of compensation, suggesting that firms might be lowering their potential and/or default match rates enough to completely offset the higher costs of automatic enrollment without needing to reduce other compensation costs.
Number of Pages in PDF File: 45
Date posted: November 28, 2012
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