NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH
RRC Home | Papers | Books | People | Events | SSA Centers |

Issues in the Design of Retirement Saving Programs

1. Comparing Defined Benefit and Defined Contribution Retirement Programs

2. How Are Participation and Saving Affected By Plan Design?

3. Portfolio Choice and the Accumulation of Retirement Assets

4. What Payout Requirements or Options Should Accompany Retirement Saving Programs?

Facilitating Comparisons between Defined Benefit and Defined Contribution Systems

Stephen Zeldes     John Geanakoplos

Discussion of the relative merits of the current pay-as-you-go and a funded Personal Retirement Account (PRA) system is often hampered by a limited understanding of the potential features of both systems. We proposed to facilitate discussion of the features of the two systems by developing a formal description of the two types of plans that allows their features to be compared on an even keel. To this end, the project will develop analytical models of Social Security that highlight the functional features of the program, whether those features are administered through the current structure, or through private accounts.

Project NB05-07: Reforming Social Security with Progressive Personal Accounts
Executive Summary     Policy Abstract     Working Paper    

[back]

The Annuity from Social Security: Who Values It and Who Doesn't

Jeffrey Brown     Olivia Mitchell

A series of questions was included in the 2004 Health and Retirement Study as an experimental module, asking over 1,000 respondents whether they would be willing to give up half their lifetime Social Security benefits in exchange for a single lump-sum cash payment at age 65. The project will analyze these data to assess how responses co-vary with demographic, preference, and economic factors.

Project NB07-02: Who Values the Social Security Annuity? New evidence on the Annuity Puzzle

Executive Summary     Policy Abstract     Working Paper    

[back]

Comparing Individual Decision-Making between DB and DC Retirement Program Options

Jeffrey Brown     Scott Weisbenner

This multi-phase project analyzes the retirement policy decisions made by employees who are offered a choice between a personal account retirement system (a defined contribution plan) and a tradicional defined Benedit pension system. We will analyze administrative data from the State University Retirement System of Illinois, where new participants must choose between a personal account and a traditional defined benefit system.

Project NB06-03: When Given the Option, Who Chooses a DC Plan and Who Chooses a DB Plan

Executive Summary     Policy Abstract     Working Paper    

Project NB07-01: Why Do Individuals Choose Defined Contribution Plans?

Executive Summary     Policy Abstract     Working Paper    

[back]

How Do Default Options Affect Participation and Saving?

David Laibson     Brigitte Madrian     James Choi

Researchers in this project are drawing on what they have learned from default experiments in 401(k) plans to inform the design of an investment-based component to Social Security. The project has two key components. The first focuses on the passive behavior of 401(k) investors, the importance of default provisions, and how defaults might be applied most effectively to Social Security Personal Retirement Accounts. The second is an analysis of why so many people who could unequivocally and significantly gain financially by contributing more to a 401(k) plan - because of the employer matching provisions and penalty-free withdrawals from the plan - still don't do it. In this analysis too, the focus is on the program defaults, the factors influencing saving decisions, and the implications for designing an investment-based component to Social Security

Project NB04-08: How Would Default Options Affect Participation and Saving?

A. Saving for Retirement on the Path of Least Resistance

Executive Summary
Policy Abstract
Working Paper

B. $100 Bills on the Sidewalk: Suboptimal Saving in 401(k) Plans

Executive Summary
Policy Abstract
Working Paper

[back]

How Can Plan Design Help to Control Management Fees?

David Laibson     Brigitte Madrian     James Choi

The design of a Personal Retirement Account (PRA) program will have a great deal to do with its success. The choice of investment can have a large effect on the accumulation of individual assets. Is there a way to present information abut investment options that will increase the likelihood that participants make the best choices? The goal of this project is to explore ways that investment choices can be improved. It focuses particularly on management fees, and the how clear information about management fees might serve to reduce them.

Project NB05-06: Why Does the Law of One Price Fail? An Experiment on Index Mutual Funds
Executive Summary     Policy Abstract     Working Paper    

[back]

Do Employer Contributions to 401(k) Plans Crowd Out Discretionary Employee Contributions?

David Laibson     Brigitte Madrian     James Choi

With a diversity of tax-favored savings vehicles available in the marketplace, an important policy question is the extent to which policies that promote saving in one type of vehicle generate net new savings, versus displacing - or crowding out - saving that would have taken place anyway. In this project, we analyze whether discretionary employee contributions to 401(k) plans are reduced when the employer increases the employer-provided contribution to the plan.

Project NB07-09: The Impact of Employer Matching on Savings Plan Participation under Automatic Enrollment
Executive Summary     Policy Abstract     Working Paper    

[back]

Personal Account Investment Options and Portfolio Choice: Behavioral Lessons from 401(k) Plans

Jeff Brown     Scott Weisbenner

This project considers the relationship between the structure of personal accounts and four aspects of participant investment behavior: 1) how the set of investment alternatives available to participants affects their portfolio allocations, 2) the effect of investment restrictions, such as floors or caps on particular assets, on portfolio choice, 3) the role of inertia, how investment allocations change when new investment options are made available to participants, and 4) how contributions across asset classes (e.g., stocks versus bonds) respond to past returns. The analysis is based on 401(k) data, with the lessons from 401(k) plans used to draw lessons for the structure of Personal Retirement Accounts.

Project NB04-04: Individual Account Investment Options and Portfolio Choice: Behavioral Lessons from 401(k) Plans

Executive Summary     Policy Abstract     Working Paper

[back]

What Are The Effects Of Portfolio Choice On Retirement Wealth Outcomes?

Jeff Brown     Scott Weisbenner

If there were a Personal Retirement Account (PRA) component to the Social Security system, the accumulation of individual wealth at retirement would depend on the investment choices that individuals make. This project will consider how the structure of PRA investment options is likely to affect accumulation of individual retirement wealth.

Project NB05-03: 401(k) Investment Options, Portfolio Choice and Retirement Wealth

Executive Summary     Policy Abstract     Working Paper

[back]

Understanding the Risks of Nominal Bonds: Implications for Retirement Plans

John Campbell     Luis Viceira

This project considers the role of nominal bonds in a retirement saving portfolio for both individual retirement saving programs and traditional pension funds. Are nominal bonds risky investments, which investors must be rewarded to hola, or are they safe investments whose price movements are Esther inconsequential or possibly even beneficial to investors as a hedge against other risks? What is the relation between nominal bonds and inflation-indexed bonds such as TIPS issued by the US Treasury? And what weights should investors saving for retirement give to these different types of bonds?

Project NB07-12: Inflation Bets or Deflation Hedges? The Changing Risks of Nominal Bonds

Executive Summary     Policy Abstract     Working Paper

[back]

Should Lower Income Workers Hold Stocks? The Role of Social Security

Kent Smetters

The goal of this research is to analyze whether a pay-as-you-go Social Security System affects the optimal allocation of household saving across alternative investments. We will consider the influence of Social Security on optimal investment portfolios across households at different income levels, and expect the optimal allocation to vary, base don differences in their relative reliance on Social Security, ando n the correlation between equito returns and expected Social Security benefits in the future.

Project NB07-08: Should Lower Income Workers Hold Stocks? The Role of Social Security

Executive Summary     Policy Abstract     Working Paper

[back]

Costs and Benefits of Choice in the Annuitization of Retirement Assets

Liran Einav     Amy Finkelstein

This project uses proprietary individual-level data on annuity choices in the United Kingdom to investigate the relative importante of adverse selection and preferente heterogeneity in annuity choices. We will use these estimates to compare the benefits of choice (allowing individuals to self select their optimal annuity level) and its costs (due to adverse selection) in social insurance programs.

Project NB07-16: The Welfare Cost of Asymmetric Information: Evidence from the U.K. Annuity Market

Executive Summary     Policy Abstract     Working Paper

[back]

The Liquification and Mid-Life Consumption of Retirement Assets: Evidence from 401(k) Loans

James Choi     David Laibson     Brigitte Madrian

In recent years, there has been a marked change in the ability of individuals to tap into "illiquid" assets, using, for example, home equity loans and mortgages, lump-sum payouts from pension plans, the loan provisions of retirement saving plans, or credit card debt. The goal of this project is to explore the implications of this growing liquidity, using 401(k) savings plans as a case study. We will analyze the availability of 401(k) loans, how the loan provisions affect borrowing, the magnitude of borrowing and repayment, and the implications for asset accumulation.

Project NB08-09: The Liquification and mid-Life Consumption of Retirement Assets: Evidence from 401(k) Loans

Executive Summary     Policy Abstract     Working Paper

[back]
 
Publications
Activities
Meetings
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us