Do Employer Pension Contributions Reflect Employee Preferences? Evidence from a Retirement Savings Reform in Denmark

Itzik Fadlon, Jessica Laird and Torben Nielsen ()

American Economic Journal: Applied Economics, 2016, vol. 8, issue 3, 196-216

Abstract: This paper studies how firms set contributions to employer provided 401(k)-type pension plans. Using a reform that decreased the subsidy to contributions to capital pension accounts for Danish workers in the top income tax bracket, we provide strong evidence that employers' contributions are based on their employees' savings preferences. We find an immediate decrease in employer contributions to capital accounts, whose magnitude increased in the share of employees directly affected by the reform. This response was large relative to average employee responses within private IRA-type plans and was accompanied by a similar magnitude shift of employer contributions to annuity accounts.

JEL-codes: D14 J26 J32 (search for similar items in EconPapers)
Date: 2016
Note: DOI: 10.1257/app.20150015
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Citations: View citations in EconPapers (1)

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Working Paper: Do Employer Pension Contributions Reflect Employee Preferences? Evidence from a Retirement Savings Reform in Denmark (2015)
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