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Automatic enrollment and job market turnover

Author

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  • Hung, Angela A.
  • Luoto, Jill
  • Burke, Jeremy
  • Utkus, Stephen P.
  • Young, Jean A.

Abstract

Automatic enrollment has substantially increased employee participation in defined contribution plans. Yet little is known about how retirement plan design features influence retirement wealth accumulation in a setting of labor market turnover. We find that employees separating from jobs with automatic enrollment plans are significantly more likely to take a cash distribution (and potentially pay a tax penalty) than those separating from jobs with voluntary enrollment plans, offsetting some of the benefits from automatic enrollment. Yet given the sizeable improvements in plan participation from automatic enrollment, wealth accumulation for automatically enrolled participants, net of cash-outs and penalties, remain higher than it would have been under voluntary enrollment.

Suggested Citation

  • Hung, Angela A. & Luoto, Jill & Burke, Jeremy & Utkus, Stephen P. & Young, Jean A., 2021. "Automatic enrollment and job market turnover," Journal of Pension Economics and Finance, Cambridge University Press, vol. 20(4), pages 547-557, October.
    • Handle: RePEc:cup:jpenef:v:20:y:2021:i:4:p:547-557_9
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    Cited by:

    1. Bonekamp, Johan & van Soest, Arthur, 2022. "Evidence of behavioural life-cycle features in spending patterns after retirement," The Journal of the Economics of Ageing, Elsevier, vol. 23(C).

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