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Financial Education and Choice in State Public Pension Systems

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  • Julie Agnew
  • Joshua Hurwitz

Abstract

As more and more public pension systems are shifting away from a defined benefit only framework, the complexity of the financial decisions facing public employees is increasing. This raises some concerns about the financial literacy of participants and their ability to make informed decisions. While surveys addressing financial education in private plans are available, little is known about what types of education and advice are offered in public plans. This paper fills this gap by presenting new results from the first National Public Pension Plan Financial Education Survey. The paper focuses specifically on primary defined contribution and hybrid plans. The results indicate that some form of education or advice is offered by every surveyed plan and that the sponsoring entity is actively involved in the development of the programs. However, it appears that legal uncertainties related to advice and education may be a problem for a few plans. In addition, more rigorous evaluation methods to test programs are needed. The paper concludes with suggestions for areas of future research.

Suggested Citation

  • Julie Agnew & Joshua Hurwitz, 2013. "Financial Education and Choice in State Public Pension Systems," NBER Working Papers 18907, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:18907
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    File URL: http://www.nber.org/papers/w18907.pdf
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    References listed on IDEAS

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    1. Lusardi, Annamaria & Mitchell, Olivia S., 2011. "Financial literacy and retirement planning in the United States," Journal of Pension Economics and Finance, Cambridge University Press, vol. 10(04), pages 509-525, October.
    2. Lusardi, Annamaria & Mitchell, Olivia S., 2007. "Baby Boomer retirement security: The roles of planning, financial literacy, and housing wealth," Journal of Monetary Economics, Elsevier, vol. 54(1), pages 205-224, January.
    3. Annamaria Lusardi & Olivia S Mitchelli, 2007. "Financial Literacy and Retirement Preparedness: Evidence and Implications for Financial Education," Business Economics, Palgrave Macmillan;National Association for Business Economics, vol. 42(1), pages 35-44, January.
    4. Lusardi, Annamaria & Mitchell, Olivia S., 2011. "Financial literacy around the world: an overview," Journal of Pension Economics and Finance, Cambridge University Press, vol. 10(04), pages 497-508, October.
    5. Angela A. Hung & Joanne Yoong, 2010. "Asking for Help: Survey And Experimental Evidence on Financial Advice And Behavior Change," Working Papers 714-1, RAND Corporation.
    6. Gopi Shah Goda & Colleen Flaherty Manchester, 2013. "Incorporating Employee Heterogeneity into Default Rules for Retirement Plan Selection," Journal of Human Resources, University of Wisconsin Press, vol. 48(1), pages 198-235.
    7. Agnew, Julie R. & Szykman, Lisa R. & Utkus, Stephen P. & Young, Jean A., 2012. "Trust, plan knowledge and 401(k) savings behavior," Journal of Pension Economics and Finance, Cambridge University Press, vol. 11(01), pages 1-20, January.
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    More about this item

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • H75 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Government: Health, Education, and Welfare
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies

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