Does Autoenrollment Affect Employer Contributions?
Low participation rates limit the effectiveness of 401(k) plans as a reliable source of retirement income. About one in five workers eligible to participate in their employer’s 401(k) plans do not enroll (Munnell, Golub-Sass, and Muldoon 2009). Firms can raise participation rates by automatically enrolling employees as soon as they become eligible. However, higher participation rates increase costs for employers that match employee contributions, and firms appear to reduce the rate at which they contribute to 401(k) plans when they adopt autoenrollment.
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Did You Know?
NAFI Retirement Plans are retirement plans sponsored by government entities known as Non-Appropriated Fund Instrumentalities (NAFIs). NAFIs are part of the federal government but they do not receive funding from Congress. Instead, NAFIs fund themselves with revenue they earn through the services and products that they provide. Because NAFI employees are not eligible to participate in the retirement plans available to most civilian federal government employees, NAFIs sponsor their own plans. Learn more.