Wharton Pension Research Council Working Papers

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Working Paper

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Many Americans continue to be financially underprepared for their retirement. Automatic enrollment in employer-sponsored qualified retirement plans (QRPs) has helped, but the target-date funds commonly used as default investment choices have their own problems. We propose a target-date version of the recently developed Registered Index-Linked Annuities and we suggest that these “TD-RILAs” provide a more cost-effective and more transparent way to attain a diversified equity exposure, the level of which decreases over time. A theoretical analysis explores the optimal structure of TD-RILAs and their comparison to target-date funds from an investor’s perspective. A large-scale lab experiment sheds further light on investors’ preferences, focusing on the importance of product transparency, of the employer’s default investment choice, and of the role of information in improving financial literacy. We conclude that TD-RILAs would be a suitable addition to QRPs and may even rival target-date funds as Qualified Default Investment Alternatives.


annuities, target-date funds, financial literacy, qualified retirement plans

Working Paper Number



The project described received funding from the TIAA Institute and Wharton School’s Pension Research Council/Boettner Center. The content is solely the responsibility of the authors and does not necessarily represent the official views of the TIAA Institute or Wharton School’s Pension Research Council/Boettner Center.

Copyright/Permission Statement

All findings, interpretations, and conclusions of this paper represent the views of the authors and does not represent official views of the above-named institutions. © 2023 Pension Research Council of the Wharton School of the University of Pennsylvania. All rights reserved.

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Economics Commons



Date Posted: 26 May 2023