Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/246874 
Year of Publication: 
2021
Series/Report no.: 
CFS Working Paper Series No. 662
Publisher: 
Goethe University Frankfurt, Center for Financial Studies (CFS), Frankfurt a. M.
Abstract: 
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.
Subjects: 
automatic enrollment
pension
portfolio allocation
endorsement effect
default effect
retirement saving
JEL: 
D12
D14
D91
G41
G51
J32
Document Type: 
Working Paper

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