Do Employer Pension Contributions Reflect Employee Preferences? Evidence from a Retirement Savings Reform in Denmark

Publikation: Bidrag til tidsskriftTidsskriftartikelForskningfagfællebedømt

This paper studies how firms set contributions to employer provided 401(k)-type pension plans. Using a reform that decreased the subsidy to contributions to capital pension accounts for Danish workers in the top income tax bracket, we provide strong evidence that employers' contributions are based on their employees' savings preferences. We find an immediate decrease in employer contributions to capital accounts, whose magnitude increased in the share of employees directly affected by the reform. This response was large relative to average employee responses within private IRA-type plans and was accompanied by a similar magnitude shift of employer contributions to annuity accounts.
TidsskriftAmerican Economic Journal: Applied Economics
Udgave nummer3
Sider (fra-til)196-216
Antal sider21
StatusUdgivet - jul. 2016

ID: 131546398