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Trust, plan knowledge and 401(k) savings behavior

Author

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  • AGNEW, JULIE R.
  • SZYKMAN, LISA R.
  • UTKUS, STEPHEN P.
  • YOUNG, JEAN A.

Abstract

Plan knowledge and trust in financial institutions – two variables missing from standard neoclassical or behavioral models of decision-making – are strongly correlated to 401(k) savings behavior based on results from this paper. In voluntary enrollment settings, plan knowledge and demographic characteristics are related to participation in a 401(k) plan. In automatic enrollment settings, trust in financial institutions and knowledge of an available plan match are related to participation. Although this study cannot prove causality of the relationships, it does extend our understanding of the complex factors underlying savings choices. Policy implications are discussed.

Suggested Citation

  • 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(1), pages 1-20, January.
    • Handle: RePEc:cup:jpenef:v:11:y:2012:i:01:p:1-20_00
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    Citations

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    Cited by:

    1. Renuka Sane & Susan Thomas, 2015. "In Search of Inclusion: Informal Sector Participation in a Voluntary, Defined Contribution Pension System," Journal of Development Studies, Taylor & Francis Journals, vol. 51(10), pages 1409-1424, October.
    2. Carin van der Cruijsen & Jakob de Haan & Ria Roerink, 2023. "Trust in financial institutions: A survey," Journal of Economic Surveys, Wiley Blackwell, vol. 37(4), pages 1214-1254, September.
    3. Mason, Richard, 2019. "Digital enrollment architecture and retirement savings decisions: Evidence from the field," Other publications TiSEM 58639618-e34e-4b5c-8c8c-a, Tilburg University, School of Economics and Management.
    4. Calcagno, Riccardo & Monticone, Chiara, 2015. "Financial literacy and the demand for financial advice," Journal of Banking & Finance, Elsevier, vol. 50(C), pages 363-380.
    5. Hazel Bateman & Inka Eberhardt, 2024. "How Fact Sheets affect retirement income product knowledge, perceptions and choices," Australian Journal of Management, Australian School of Business, vol. 49(2), pages 119-141, May.
    6. Goedde-Menke, Michael & Lehmensiek-Starke, Moritz & Nolte, Sven, 2014. "An empirical test of competing hypotheses for the annuity puzzle," Journal of Economic Psychology, Elsevier, vol. 43(C), pages 75-91.
    7. Post, Thomas & Hanewald, Katja, 2013. "Longevity risk, subjective survival expectations, and individual saving behavior," Journal of Economic Behavior & Organization, Elsevier, vol. 86(C), pages 200-220.
    8. López, Fernando & Rosas, Guillermo, 2022. "COVID-19 and attitudes towards early withdrawal of pension funds: The role of trust and political ideology," The Journal of the Economics of Ageing, Elsevier, vol. 23(C).
    9. Philip Maximilian Linhart & Olaf Stotz, 2022. "Which factors support trust in the recommendation process of pension products? Trust and pension products," Journal of Financial Services Marketing, Palgrave Macmillan, vol. 27(4), pages 322-334, December.
    10. Koh, Benedict S.K. & Mitchell, Olivia S. & Fong, Joelle H., 2021. "Trust and retirement preparedness: Evidence from Singapore," The Journal of the Economics of Ageing, Elsevier, vol. 18(C).
    11. François Facchini & Sophie Massin & Kevin Brookes, 2024. "The relationship between institutional quality, trust and private savings," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-04379761, HAL.
    12. Litterscheidt, Rouven & Streich, David J., 2020. "Financial education and digital asset management: What's in the black box?," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 87(C).
    13. Julie Agnew & Joshua Hurwitz, 2013. "Financial Education and Choice in State Public Pension Systems," NBER Working Papers 18907, National Bureau of Economic Research, Inc.
    14. A.M.J. Deetlefs & H. Bateman & L. Isabella Dobrescu & B.R. Newell & Andreas Ortmann & Susan Thorp, 2015. "Suspicious Minds (can be a good thing when saving for retirement)," Discussion Papers 2015-06A, School of Economics, The University of New South Wales.
    15. Yunju Nam & Elizabeth Hole & Michael Sherraden & Margaret M. Clancy, 2018. "Program Knowledge and Racial Disparities in Savings Outcomes in a Child Development Account Experiment," Journal of Family and Economic Issues, Springer, vol. 39(1), pages 145-162, March.
    16. Floor Goedkoop & Madi Mangan & Mauro Mastrogiacomo & Stefan Hochguertel, 2023. "Trust in the financial performance of pension funds, public perception, and its effect on participation in voluntary pension saving plans," Working Papers 783, DNB.

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