Nudging employers to register their employees for state-facilitated savings plan

Background

Evidence has shown that the most effective way to get people to save for retirement is by automatically saving part of each paycheck. Unfortunately, many Americans with part-time jobs or that work for small businesses do not have access to employer-based retirement benefits. An increasing number of states are offering state-facilitated retirement plans (SFRPs), which allow employees to set up payroll deductions for retirement savings. Ascensus partners with states to provide record-keeping, administrative, and support services not only for the newly emerging SFRPs, but also for a range of retirement and college savings programs.

While SFRPs have increased access to retirement savings, that access depends on employers completing registration, setting up accounts for the program, and sending employee payroll data. Many employers are slow to do so or they never finish the process. Without employer action, employees lose out on the ability to use the SFRPs. We partnered with Ascensus and the OregonSaves program to explore how to encourage employers to finish the registration and account set up process.

Key Insights

To better understand what might prevent employers from completing the registration and account set up process, we began by detailing the steps they must take in a behavior map.

We then further developed the map by undertaking a diagnosis of the online portal and by having Ascensus take us through the process. That diagnosis highlighted two barriers that we believe to be especially important:

• The account registration and the account set up are two separate processes. Employers might feel they are done with the process when in reality they have only done the first step and still need to upload employee information.

• Employers have many things that they are managing at once and many of them need a nudge to complete the employee registration process. Even though the process is something they are required to do, they may forget, and the frictions in the process make it easy for them to procrastinate and put off completing the process.

Experiment

We decided to focus first on employers that had registered, but not yet added employee information, in the OregonSaves SFRP. Those employers were split into four treatment conditions, corresponding to four versions of an email reminder.

Results

Reminder emails were sent to just over 6,000 employers. Our analysis found that the compliance framing was the best performing email to encourage employers to add employee information. Switching from the control version to the compliance version led to an 11.6% increase in the probability of adding employee information to the portal (p=<0.001).

Employers also responded the fastest to the compliance email. Approximately 32% responded within the first week, the highest proportion of the emails we tested. The average amount of time decreased by about 8.6% (p=0.14). The helpful framing may have been slightly more effective than the control, but it also may have led to employer taking more time to finish the payroll.

In total, we estimate that across the 6,000 firms our experiment reached around 30,000 employees and that the increase in firms adding their employees’ information led to approximately 1,100 individuals having access to retirement savings through their employer.