Wharton Pension Research Council Working Papers

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Working Paper

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Individual responsibility for portfolio construction is a central theme for defined contribution pensions, yet the rise of target-date funds is shifting investment decisions from workers back to employers. A complex choice architecture including automatic enrollment, reenrollment, and fund mapping, is increasing the number of participants defaulting into employer-selected target-date funds. At the same time, portfolios of non-defaulted participants undergo sizeable changes, with equity share ratios widening by over 40 percent points between younger/older participants. Among active decision-makers, these funds act as a form of implicit employer-provided lifecycle investment advice. More broadly, our findings highlight malleable preferences among retirement investors and a demand for default-based guidance or simplified advice for households facing complex choices.

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Copyright/Permission Statement

All findings, interpretations, and conclusions of this paper represent the views of the authors and not those of the Wharton School or the Pension Research Council, the SSA, any agency of the Federal Government, Vanguard, the MRRC, or any other institution with which the authors are affiliated. ©2012 Mitchell and Utkus. All rights reserved.


This research is part of the NBER programs on Aging and Labor Studies and the Household Finance Working Group. It was undertaken pursuant to a grant from the US Social Security Administration (SSA) to the Michigan Retirement Research Center (MRRC). This research support is gratefully acknowledged along with that of the Pension Research Council at The Wharton School of the University of Pennsylvania and Vanguard. The authors thank Yong Yu for exceptional research assistance and acknowledge Vanguard’s efforts in the provision of recordkeeping data under restricted access conditions. The authors also thank John Ameriks and Jean Young for helpful comments.

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Date Posted: 28 June 2019