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Impact of Defaults in Retirement Saving Plans: Public Employee Plans (Clark, 2019)

Review Guidelines

Absence of conflict of interest. 


Clark, R. L., & Pelletier, D. (2019). Impact of Defaults in Retirement Saving Plans: Public Employee Plans (No. w26234). National Bureau of Economic Research


  • The study's objective was to examine the impact of automatic enrollment of new hires into a supplemental retirement savings plan (SRP) on participation in the first year. 

  • The study uses a difference-in-differences analysis with fixed effects to explore the differences pre- and post- policy implementation, as well as differences between agencies that did and did not adopt automatic enrollment in the SRP plan for new hires.  

  • The study found a positive statistically significant relationship between auto-enrollment for new hires in SRP and the overall participation rate in SRP.  

  • The quality of causal evidence presented in this report is moderate. This means we are somewhat confident that the estimated effects are attributable to automatic enrollment into supplemental retirement savings plan (SRP), but other factors might also have contributed. 

Intervention Examined

Automatic enrollment into the Supplemental Retirement Savings Plan (SRP)

Features of the Intervention

Research emerged in the early 2000s examining the effects of savings defaults on participation in retirement plans. These studies found significant increased participation following auto enrollment into retirement or savings plan. However, automatic enrollment has generally been limited to private firms, with little known about the effects in the public sector. 

In 2010, South Dakota created an automatic enrollment policy in which state agencies could opt-in to have their new hires auto enrolled into the SRP, contributing a default $25 per month. Employees have a 90-day period where they can opt out of SRP and receive a refund, with refunds after 90-days limited. Unlike employers in earlier studies, South Dakota public employees have two other primary retirement income sources (that equals up to 75 percent of their pre-retirement salary), no employer-matched contribution, and a lower default contribution. 

Features of the Study

The authors use a difference-in-differences analyses to explore the effects of automatic enrollment among career public employees in South Dakota. They examined differences pre- and post- policy implementation (time) as well as differences between agencies that eventually adopted automatic enrollment (2010-2016) and those that never did. Workers at agencies that adopted auto-enrollment into SRP comprise the treatment group. Employees who were hired pre-policy between 2005-2009 and employees in agencies that did not auto-enroll in SRP comprise the comparison condition.  

The sample is new-hire employees at government agencies in South Dakota between 2005-2016, a total of over 50,333 employees. Demographically, the sample is on average 37 years old, majority female (61-62%), and earns on average $29,000. The study used administrative data from the South Dakota Retirement System (SDRS) for all public employees hired between 2006 and 2016, which includes annual measures of contributions, balances, and salary reported over fiscal years running July through June. The data include demographic characteristics such as age and gender.  The authors use statistical analyses to explore differences in participation in SRP, comparing those who were auto enrolled to those who were not. The analyses consider individual-level characteristics that could also affect SRP enrollment behavior to ensure that differences in treatment and comparison groups are taken into account.   


Employer Benefits Receipt

  • Following the introduction of an auto-enrollment policy, newly hired workers were statistically significantly more likely to participate in the supplemental retirement savings plan (SRP) within their first year of work compared to those who were not auto-enrolled.   

Considerations for Interpreting the Findings

The author’s interpretation that auto enrollment, "tends to eliminate differences in saving tendencies by age, gender, and salary" is somewhat overstated. In some cases, the characteristics of the participants, such as age, gender, and salary do have a significant relationship with their decision to enroll in the SRP. The robust effects of auto enrollment mean that these interactions do not have a major impact on the main findings, but they do merit mention.   

Causal Evidence Rating

The quality of causal evidence presented in this report is moderate because it was based on a well-implemented non-experimental design. This means we are somewhat confident that the estimated effects are attributable to auto-enrollment into SRP but other factors might also have contributed. 

Reviewed by CLEAR

November 2022