Precautionary Liquidity and Worker Decisions in French Employee Saving Plans

Marie Brière (), James Poterba and Ariane Szafarz

No 29601, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper investigates the demand for precautionary liquidity versus commitment contracts among participants in retirement saving programs by analyzing administrative data from the largest workplace saving plan provider in France, a country in which employers have wide discretion in structuring these plans. All firms in the sample offer medium-term investments, which cannot be accessed for five years, and some also offer long-term investments, which cannot be accessed until retirement. All plans feature auto-enrollment. When a plan offers long-term investments, those investments must be included in the plan default. Analysis of workers who experience changes in access to long-term investments as a result of job change suggests that when plans offer long-term investments, acceptance of the default option falls by about 6 percentage points and overall plan participation falls about 3 percentage points. Although workers seem to prefer medium-term to long-term investments, at firms that offer long-term investments, two-thirds of those who opt out of the default and make active choices allocate at least some of their contributions to them. Most allocate less to long-term investments than the default allocation, suggesting that contributors are reluctant to forego access to their accounts completely but nevertheless value commitment contracts.

JEL-codes: G41 G5 G51 H24 J14 (search for similar items in EconPapers)
Date: 2021-12
New Economics Papers: this item is included in nep-age, nep-eur and nep-lab
Note: AG PE
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Citations: View citations in EconPapers (3)

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