Learning by doing: Active employer sponsored retirement savings plan participation and household wealth accumulation

This paper investigates the impact of household exposure to employer pension plan features using the Health and Retirement Survey. We investigate whether exposure to active management (choice) or participation in plan-sponsored financial education seminars impacts household portfolio allocations and wealth. We consider interactions between pension design and investment patterns outside of workers’ pension plans, utilizing two parametric estimators: the random effects probit and the multivariate probit. We extend our results non-parametrically via propensity score matching. We find repeated evidence that both of the plan features improve asset allocations and financial outcomes for recent retirees, especially when used together.

► We investigate the behavioral impact of exposure to employer retirement plan features using the first six waves of the Health and Retirement Survey. ► We find exposure to active management (choice) and plan-sponsored financial education affects household non-pension allocations and wealth. ► Results are found by way of two parametric estimators and one non-parametric estimator: the random effects probit, the multivariate probit and propensity score matching. ► We find both of the plan features improve asset allocations and financial outcomes for recent retirees.