Auto-Enrollment Lowers Employer Match

According to the Center for Retirement Research (CRR) at Boston College, the implementation of automatic enrollment is causing some employers to lower the default match rate, based on the belief that this will keep cost pressures in check. The CRR notes that National Compensation Survey data supports the finding that plans with auto-enrollment have slightly lower match levels than do plans without auto-enrollment. The CRR took this a step further, finding that in reality, there was no evidence of higher costs for plans with auto-enrollment. Auto-enrollment naturally improves participation rates, particularly as few individuals opt out of it. The lowering of the match can hurt employees who otherwise would have contributed more to their plan, thus adversely impacting savings over the long term.