Default Options and Retirement Saving Dynamics

Research question. Does automatic enrollment (auto-enrollment) in retirement savings plans increase lifetime wealth accumulation and welfare? The prior literature established large short-run participation effects but had not traced the policy’s consequences over a full working life.

Data. The paper draws on two primary sources. First, a proprietary panel of 401(k) administrative records from nearly 600 U.S. firms, covering roughly 159,216 first-year employees across 86 firms (for the “increasing default” fact) and 6,415 employees across 34 firms (for structural estimation), observed between December 2006 and December 2017. Second, 12 successive waves (2006–2017) of the U.K. Annual Survey of Hours and Earnings (ASHE), a 1% nationally representative panel of approximately 200,000 private-sector employees per year, including 37,120 job-switchers, used to exploit the phased rollout of the U.K. Pension Act of 2008.

Taha Choukhmane | Macro Paper Warehouse

Default Options and Retirement Saving Dynamics