The Effect of Employer Matching and Defaults on Workers’ TSP Savings Behavior
Presentation
Presentation by Justin Falk and Nadia Karamcheva, analysts in CBO's Labor, Income Security, and Long-Term Analysis Division, to the Association for Public Policy Analysis & Management.
The effects of an employer match, automatic enrollment, and other defaults on employees’ savings behavior have been studied extensively. However, most of the previous literature has examined such changes in defined contribution plans in the private sector—an approach that makes extrapolating findings to public-sector workers difficult.
Moreover, current empirical approaches are ill suited for forecasting the combined effect of changing matching and default rates on savings behavior because few studies develop models that predict the distribution of employees’ contribution rates.
The study described here uses two sources of exogenous variation stemming from policy changes to the retirement benefits of federal workers to estimate the effects of matching and defaults on their savings behavior.
