Defined Contribution Pension Plans: Sticky or Discerning Money?

Clemens Sialm, Laura Starks and Hanjiang Zhang

No 19569, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Participants in defined contribution (DC) retirement plans rarely adjust their portfolio allocations, suggesting that their investment choices and consequent money flows are sticky and not discerning. Yet, the participants' inertia could be offset by the DC plan sponsors, who adjust the plan's investment options. We examine these countervailing influences on flows into U.S. mutual funds. We find that flows into funds that derive from DC assets are more volatile and exhibit more performance sensitivity than non-DC flows, primarily due to the adjustments of the investment options by the plan sponsors. Thus, DC retirement money is less sticky and more discerning.

JEL-codes: G02 G18 G23 G28 H55 (search for similar items in EconPapers)
Date: 2013-10
New Economics Papers: this item is included in nep-age
Note: AG AP CF PE
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Citations: View citations in EconPapers (3)

Published as Clemens Sialm & Laura T. Starks & Hanjiang Zhang, 2015. "Defined Contribution Pension Plans: Sticky or Discerning Money?," Journal of Finance, American Finance Association, vol. 70(2), pages 805-838, 04.

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Journal Article: Defined Contribution Pension Plans: Sticky or Discerning Money? (2015)
Working Paper: Defined Contribution Pension Plans: Sticky or Discerning Money? (2014)
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