Automatic Enrollment, Employee Compensation, and Retirement Security

Center for Retirement Research at Boston College Working Paper No. 2012-25

45 Pages Posted: 28 Nov 2012  

Barbara A. Butrica

The Urban Institute

Nadia S. Karamcheva

Urban Institute; Boston College - Center for Retirement Research

Date Written: November 1, 2012

Abstract

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.

Suggested Citation

Butrica, Barbara A. and Karamcheva, Nadia S., Automatic Enrollment, Employee Compensation, and Retirement Security (November 1, 2012). Center for Retirement Research at Boston College Working Paper No. 2012-25. Available at SSRN: https://ssrn.com/abstract=2181649 or http://dx.doi.org/10.2139/ssrn.2181649

Barbara A. Butrica (Contact Author)

The Urban Institute ( email )

2100 M Street, N.W.
Washington, DC 20037
United States

Nadia S. Karamcheva

Urban Institute ( email )

2100 M Street NW
Washington, DC 20037
United States

Boston College - Center for Retirement Research ( email )

Fulton Hall 550
Chestnut Hill, MA 02467
United States

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