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It Pays to Set the Menu: Mutual Fund Investment Options in 401(k) plans
This paper investigates whether mutual fund families acting as service providers in 401(k) plans display favoritism toward their own funds. Using a hand-collected dataset on retirement investment options, we show that poorly-performing funds are less likely to be removed from and more likely to be added to a 401(k) menu if they are affiliated with the plan trustee. We find no evidence that plan participants undo this affiliation bias through their investment choices. Finally, the subsequent performance of poorly-performing affiliated funds indicates that these trustee decisions are not ...
Cost shifting and the freezing of corporate pension plans
Many U.S. corporations have frozen defined benefit (DB) pension plans, replacing new DB promises with contributions to defined contribution (DC) plans. We estimate expected DB accruals from the age-service and salary distributions of a large sample of U.S. corporate pension plans with more than 1,000 employees. Comparing the counterfactual DB accruals to the actual increase in 401(k) and other DC contributions for firms that freeze, we find only partial compensation to employees for the lost DB accruals. Net of the increase in total DC contributions, firms save 2.7-3.6% of payroll per year, ...
Introducing Section 529 Plans into the U.S. Financial Accounts and Enhanced Financial Accounts
Section 529 plans are tax-qualified college saving or prepaid tuition programs generally offered and administered by the states. Created as tax-advantaged savings vehicles, they were designed to encourage families to save for future college education expenses.
Defined-Contribution Pension Plans for State and Local Government Employees in the Financial Accounts of the United States
This note provides some background information on the DC pension plans available to state and local (S&L) government workers, briefly discusses the methodology used to construct the estimates of assets held by S&L DC pension plans, and presents the estimates currently reported in the Financial Accounts.
Saving for College and Section 529 Plans
The past decade has simultaneously witnessed a substantial increase in enrollment at post-secondary institutions and a marked increase in college tuition. Not surprisingly, this trend overlapped with an increased demand for student loans and tax-advantaged educational savings.
Introducing Actuarial Liabilities and Funding Status of Defined-Benefit Pensions in the U.S. Financial Accounts
Last year, in its September 2013 release, the Financial Accounts of the United States (formerly known as Flow of Funds accounts) changed the treatment of defined-benefit (DB) pensions from a cash accounting basis to an accrual accounting basis.
State and Local Pension Funding in the Enhanced Financial Accounts
In this Note we describe new state-level data on the funding status of state and local government defined-benefit pension plans, which is part of the Enhanced Financial Accounts (EFA) initiative.