For Better or for Worse
Top Cited Papers
- 1 January 2004
- book chapter
- Published by University of Chicago Press
Abstract
Under automatic enrollment (also called negative election), employees are automatically enrolled in their company's 401(k) plan unless the employees elect to opt out of the plan. This contrasts with the usual arrangement in which employees must actively choose to participate in their employer's 401(k). This chapter evaluates the impact of automatic enrollment over a horizon of up to four years in three different companies. It analyzes data extending to four years after the adoption of automatic enrollment in a second company, and to three years after the adoption of automatic enrollment in a third company. Based on the Vanguard report and the Profit Sharing/401(k) Council of America survey data, the three companies have typical automatic enrollment programs. One of the companies has a default contribution rate of two percent and a stable value default fund, the second has a default contribution rate of three percent and a stable value default fund, and the third has a default contribution rate of three percent and a money market default fund.Keywords
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