Wharton Pension Research Council Working Papers

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Working Paper

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This paper uses administrative data on all active employees of the Federal Reserve System to examine participation in and contributions to the Thrift Saving Plan, the System’s defined contribution (DC) plan. We link to administrative records a unique employee survey of economic/demographic factors including a set of financial literacy questions. Not surprisingly, Federal Reserve employees are substantially more financially literate than the population at large. Most importantly, financially savvy employees are also most likely to participate in their DC plan. Sophisticated workers contribute three percentage points more of their earnings to the DC plan than do the less knowledgeable, and they hold more equity in their pension accounts. We examine changes in employee plan behavior one year after employees completed a Learning Module about retirement planning, and we compare it to baseline patterns. We find that those employees who completed the Learning Module were more likely to start contributing and less likely to have stopped contributing to the DC plan post-survey. In sum, employer-provided learning programs are shown to significantly impact employee retirement saving decisions and consistent with a lot of other research, higher levels of financial literacy is found to have a beneficial impact on retirement saving patterns.

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Copyright/Permission Statement

Opinions and conclusions expressed herein are solely those of the authors and do not represent the opinions or policy of the funders or any other institutions with which the authors are affiliated. ©2016 Clark, Lusardi, and Mitchell. All rights reserved.


Research support for the work reported herein was provided by the Pension Research Council/Boettner Center at the Wharton School of the University of Pennsylvania as well as the Office of Employee Benefits at the Federal Reserve System that provided the data for the study. We are grateful for excellent programming assistance from Yong Yu, and for helpful suggestions and guidance from the staff of the Federal Reserve’s Office of Employee Benefits and Ryan Peters. We are also grateful to the editor and two anonymous referees.



Date Posted: 05 March 2019