Reducing the Complexity Costs of 401(k) Participation through Quick Enrollment

James J. Choi, David Laibson and Brigitte C. Madrian

in Developments in the Economics of Aging

Published by University of Chicago Press

Published in print April 2009 | ISBN: 9780226903354
Published online February 2013 | e-ISBN: 9780226903361 | DOI:
Reducing the Complexity Costs of 401(k) Participation through Quick Enrollment

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This chapter analyzes Quick Enrollment developed by Hewitt Associates, which gives employees the option of enrolling in the savings plan by opting into a default contribution rate and asset allocation preselected by the employer. If Quick Enrollment succeeds in reducing complexity by allowing employees to focus on evaluating a smaller subset of options (e.g. nonenrollment and the default), savings plan participation should increase relative to a standard opt-in enrollment regime. The study evaluated three different implementations of Quick Enrollment at two firms. Two of the implementations were short-term interventions that targeted nonparticipating employees who had previously been hired by the firms studied. The third was an ongoing intervention for newly hired employees. For all three implementations, Quick Enrollment resulted in substantial 401(k) participation increases, although these increases are not nearly as large as those obtained through automatic enrollment in other firms. The importance of the Quick Enrollment default for contribution rate and asset allocation outcomes is also documented.

Keywords: retirement savings plan; plan enrollment; contribution; asset allocation; Quick Enrollment

Chapter.  10023 words.  Illustrated.

Subjects: Public Economics

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