Employee savings in defined contribution plans: Evidence from age‐based policies in employer plans

Abstract Retirement saving is a critical form of self‐insurance at older ages, but ensuring that such savings are adequate remains a challenge in the United States. This is especially true for those who save through defined contribution (DC) plans, in which participants are responsible for setting both the amount and the investment strategy. In some plans, employers increase their contributions after employees reach a certain age. Whether these policies increase total retirement savings depends on whether employees offset the increases by reducing their own contributions at the designated age thresholds. Analyzing individual‐level administrative data and plans with varied age‐based employer contribution rules, we find that these age‐based employer contribution increases do not crowd out employees' own contributions and that total retirement savings increase. Our research thus offers an example of an employer‐initiated policy that can reduce employees' financial risk at older ages.