Wharton Pension Research Council Working Papers

Document Type

Working Paper

Date of this Version



Target date funds in corporate retirement plans grew from $5B in 2000 to $734B in 2018, partly because federal regulation sanctioned these as default investments in automatic enrollment plans. We show that adopters delegated pension investment decisions to fund managers selected by plan sponsors. Including these funds in retirement saving menus raised equity shares, boosted bond exposures, curtailed cash/company stock holdings, and reduced idiosyncratic risk. The adoption of low-cost target date funds may enhance retirement wealth by as much as 50 percent over a 30-year horizon.


automatic enrollment, pension, portfolio allocation, endorsement effect, default effect, retirement saving, 401(k)

JEL Code

D12, D14, D91, G41, G51, J32

Working Paper Number


Copyright/Permission Statement

All findings, interpretations, and conclusions 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. ©2020 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, and 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 and Boettner Center at The Wharton School of the University of Pennsylvania, and Vanguard. The authors would like to thank Gary Koenig, Alberto Rossi and Jean Young for helpful comments, and Yong Yu for exceptional research assistance. They acknowledge Vanguard’s efforts in the provision of anonymized recordkeeping data under restricted access conditions.

Included in

Economics Commons



Date Posted: 13 January 2020