TY  - UNPD
A1  - Keim, Donald Bruce
A1  - Mitchell, Olivia S.
T1  - Simplifying choices in defined contribution retirement plan design : a case study
T2  - Center for Financial Studies (Frankfurt am Main): CFS working paper series ; No. 573
N2  - The growth and popularity of defined contribution pensions, along with the government’s increasing attention to retirement plan costs and investment choices provided, make it important to understand how people select their retirement plan investments. This paper shows how employees in a large firm altered their fund allocations when the employer streamlined its pension fund menu and deleted nearly half of the offered funds. Using administrative data, we examine the changes in plan participant investment choices that resulted from the streamlining and how these changes might affect participants’ eventual retirement wellbeing. We show that streamlined participants’ new allocations exhibited significantly lower within-fund turnover rates and expense ratios, and we estimate this could lead to aggregate savings for these participants over a 20-year period of $20.2M, or in excess of $9,400 per participant. Moreover, after the reform, streamlined participants’ portfolios held significantly less equity and exhibited significantly lower risks by way of reduced exposures to most systematic risk factors, compared to their non-streamlined counterparts.
T3  - CFS working paper series - 573 
KW  - Retirement saving
KW  - default investment
KW  - pension
KW  - portfolio allocation
KW  - choice overload
Y1  - 2017
UR  - http://publikationen.ub.uni-frankfurt.de/frontdoor/index/index/docId/43859
UR  - https://nbn-resolving.org/urn:nbn:de:hebis:30:3-438598
UR  - https://ssrn.com/abstract=3038784
N1  - ©2017 Keim and Mitchell. All rights reserved.
IS  - September 11, 2017
PB  - Center for Financial Studies
CY  - Frankfurt, M.
ER  -