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Title:The growth of participant direction in defined contribution plans PDF Logo
Authors:Even, William E.
Macpherson, David A.
Issue Date:2009
Series/Report no.:IZA discussion papers 4088
Abstract:Since 1990, most pension plans have shifted the responsibility for directing pension assets to the employee. This study summarizes some of the possible explanations for this rapid shift toward participant direction and uses IRS Form 5500 data to investigate the effect of worker and plan characteristics on the likelihood of making a switch. The study also estimates the effect of a switch to participant direction on employee contribution and asset allocation behavior. The analysis reveals that collective bargaining and pension investments in employer stock reduce the chance of a switch to participant direction, whereas below average return performance increases the chance. Also, a switch to participant direction increases employee contributions to the pension and reduces the share of assets invested in employer securities.
Subjects:Participant direction
pensions
employer stock
JEL:J32
Persistent Identifier of the first edition:urn:nbn:de:101:1-20090330256
Document Type:Working Paper
Appears in Collections:IZA Discussion Papers, Forschungsinstitut zur Zukunft der Arbeit (IZA)

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