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Pension plan participant choice: Evidence on defined benefit and defined contribution preferences*

Published online by Cambridge University Press:  07 June 2013

PAUL GERRANS  and
GORDON L. CLARK
PAUL GERRANS
Affiliation:
UWA Business School, The University of Western Australia (e-mail: paul.gerrans@uwa.edu.au)
GORDON L. CLARK
Affiliation:
Smith School of Enterprise and the Environment, University of Oxford, and Faculty of Business and Economics, Monash University, Melbourne (e-mail: gordon.clark@smithschool.ox.ac.uk)
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Abstract

We report analysis of voluntary switching from defined benefit (DB) to defined contribution (DC) plans in an environment best characterised as benign. Using a large Australian fund database we identify socio-demographic correlates and the macroeconomic circumstances associated with DB to DC switching. The age of participants is an important correlate of switching behaviour, suggesting a degree of risk tolerance previously not recognised in the literature. It is also noted, however, that this type of switching behaviour may involve secondary behaviour such that uncertainties of DC investment performance are managed by reference to an asset allocation formula that maps to the previous DB investment strategy.

Keywords

G23G11J32Choicerisksocio-demographic statusdefined benefitdefined contributionretirement savingssuperannuation
Type
Articles
Information
Journal of Pension Economics & Finance , Volume 12 , Issue 4 , October 2013 , pp. 351 - 378
Copyright
Copyright © Cambridge University Press 2013 

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Footnotes

*

This paper was made possible by the provision of data by UniSuper. We are grateful for their continued support of this work. Thanks also to the work of Jacqui Whale in managing the database.

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