Higher Initial Contribution Levels in Automatic Enrollment Plans May R...

William L. Shiflett

David John, AARP Public Policy Institute

AARP Public Policy Institute

Published July 29, 2016

The standard default contribution rate for retirement plans is 3 percent of an employee’s net pay- but is this enough to provide a comfortable retirement? Retirement plan sponsors may be concerned that increasing the default contribution to 6 percent will result in decreased plan participation, but research suggests that similar default contributions do not result in substantially lower employee participation.

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Higher Initial Contribution Levels in Automatic Enrollment Plans May Result in Greater Retirement Savings: A Review of the Evidence