EMPLOYEE FINANCIAL LITERACY AND RETIREMENT PLAN BEHAVIOR: A CASE STUDY.

This article uses administrative data on all active employees of the Federal Reserve (FR) 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 fa...

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Publicado en:Economic Inquiry Vol. 55; no. 1; pp. 248 - 260
Autores principales: Clark, Robert, Lusardi, Annamaria, Mitchell, Olivia S.
Formato: Artículo
Publicado: Wiley-Blackwell Jan2017
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Acceso en línea:Ver este registro en EBSCOhost
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        atl: EMPLOYEE FINANCIAL LITERACY AND RETIREMENT PLAN BEHAVIOR: A CASE STUDY.
      aug:
        au:
          Clark, Robert
          Lusardi, Annamaria
          Mitchell, Olivia S.
        affil:
          Professor, Department of Economics and Department of Management, Innovation, and Entrepreneurship, North Carolina State University, Raleigh NC 27695
          Professor, Department of Accountancy, The George Washington University School of Business, Washington DC 20052
          Professor, Department of Business Economics/Policy, Wharton School University of Pennsylvania, Philadelphia PA 19104
      su:
        Savings
        Financial literacy
        Federal Reserve Board members
        Defined contribution pension plans
        Employee attitude surveys
      sug:
        subj:
          Savings
          Public Finance Activities
          Financial literacy
          Federal Reserve Board members
          Defined contribution pension plans
          Employee attitude surveys
      ab: This article uses administrative data on all active employees of the Federal Reserve (FR) 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, FR 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 1 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 postsurvey. 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 are found to have a beneficial impact on retirement saving patterns. ( JEL J3, H7)
      pubtype: Academic Journal
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    language: English
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