Do Employer Pension Contributions Reflect Employee Preferences? Evidence from a Retirement Savings Reform in Denmark / Itzik Fadlon, Jessica A. Laird, Torben Heien Nielsen.

Format:

Book

Author/Creator:

Fadlon, Itzik.

Contributor:

National Bureau of Economic Research.

Laird, Jessica A.

Nielsen, Torben Heien.

Series:

Working Paper Series (National Bureau of Economic Research) no. w21665.

NBER working paper series no. w21665

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2015.

Summary:

This paper studies how firms set contributions to employer-provided 401(k)-type pension plans. Using a reform that decreased the subsidy for contributions to capital pension accounts for Danish workers in the top income tax bracket, we provide strong evidence that employers' contributions are based on their employees' savings preferences. We find an immediate decrease in employer contributions to capital accounts, whose magnitude increased in the share of employees directly affected by the reform. This response was large relative to average employee responses within private IRA-type plans and was accompanied by a similar-magnitude shift of employer contributions to annuity accounts.

Notes:

Print version record

October 2015.