Choice and Other Determinants of Employee Contributions to Defined Contribution Plans

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Understanding the role that 401(k) plan characteristics – like investment choice – play in participation and employee contributions is important as more workers rely on this type of retirement plan and proposals for Social Security solvency include individual savings plans. Using the 1992 Health and Retirement Study, this paper investigates which individual and job characteristics are associated with asset choice in defined contribution plans. Investment choice is found to substantially increase contributions to defined contribution plans.