University of Arkansas, Fayetteville


retirement savings, mandatory contributions, behavioral biases, inertia, loss aversion, present bias, budget constraints


After the 2016 fiscal year, the University of Arkansas Retirement Plan instituted mandatory contributions for full-time employees, presumably to boost retirement savings among those least prepared for retirement. Mandatory contributions began at 1% in fiscal-year 2017 and increased annually to 5% in fiscal-year 2022. This change may have harmed employees with tight budget constraints who wish to contribute less than the minimum contribution rate. At the same time, it may have helped those who were saving less than their optimal amount due to behavioral biases. We surveyed employees at the University of Arkansas campus to assess the effects from the change to mandatory contributions and received 171 responses. Our main findings are that most respondents are unaffected by the change to mandatory contributions; a small minority are unsatisfied with the change; average contribution rates increased for all full-time employees, especially staff; a small percentage of staff, but no faculty, may have been harmed by the change; and a larger percentage of staff and faculty may have been helped. These results, however, must be interpreted with caution because they are limited by a relatively small sample size that is not representative of the employee composition at the University of Arkansas. For more robust results, a much larger survey is needed that reaches across all campuses of the University of Arkansas System to accurately assess the effects on employees from mandatory contributions.