Contributions to Defined Contribution Pension Plans

James Choi

Annual Review of Financial Economics, 2015, vol. 7, issue 1, 161-178

Abstract: Defined contribution (DC) pension plans are an increasingly important means of financing retirement consumption. Because individuals often have substantial discretion over how much is contributed to their DC pension plan, studying DC contribution choices provides general insights into the determinants of individual economic decision making. The literature has found strong deviations from many predictions of classical frictionless optimizing models. I provide an overview of the US DC pension system and review the literature on the effect of matching contributions, automatic enrollment, active choice deadlines, choice overload, financial literacy, peer effects, mental accounting, and personal experience on individuals' DC contributions.

Keywords: 401(k); behavioral economics; Individual Retirement Account; nudges; retirement; saving (search for similar items in EconPapers)
JEL-codes: D14 J32 (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (31)

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