The Design of Defined Contribution Plans

Vivek Bhattacharya and Gastón Illanes

No 29981, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Defined contribution (DC) plans are a major vehicle for retirement savings in the US, holding almost $10 trillion in assets under management. In recent years, the quality and availability of these plans has been the subject of active policy attention and of several major lawsuits. This paper studies how employers and plan providers (recordkeepers) design these plans. We argue that low plan quality and limited provision can come from two sources. First, employer willingness to pay may be misaligned with that of workers or of regulators. Second, the market for recordkeeping may be imperfectly competitive. We propose a model of plan design and estimate that while both frictions are at play, significant changes to plan quality require modifying employer preferences. Accordingly, we evaluate proposed policies and conclude that only direct quality regulation can lead to significant quality improvements. Recent proposals can increase plan provision but have negligible quality effects.

JEL-codes: C78 J32 L51 (search for similar items in EconPapers)
Date: 2022-04
New Economics Papers: this item is included in nep-age and nep-lma
Note: IO
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.nber.org/papers/w29981.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:29981

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w29981

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().