Are lifecycle funds appropriate as default options in participant-directed retirement plans?
Administrators only until July 2017
The appropriateness of default investment options in participant-directed retirement plans like 401(k) has been in sharp focus given that most participants fail to nominate an investment option to direct their contributions. In United States (US), prior to the Pension Protection Act (PPA) of 2006, plan fiduciaries often selected a money market fund as the default option. Whilst this ‘low risk and low return’ investment option was considered to be a ‘safe’ choice by many fiduciaries who were fearful of litigation risk, it was heavily criticized for resulting in inadequate wealth at retirement, particularly when retirees were living much longer and facing inflation risk (see, for example, Viceira, 2008; Skinner, 2009)...
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|Item Type:||Journal Article|
|Subjects:||Australian and New Zealand Standard Research Classification > ECONOMICS (140000)
Australian and New Zealand Standard Research Classification > ECONOMICS (140000) > APPLIED ECONOMICS (140200) > Financial Economics (140207)
Australian and New Zealand Standard Research Classification > ECONOMICS (140000) > APPLIED ECONOMICS (140200) > Public Economics- Public Choice (140213)
|Divisions:||Current > QUT Faculties and Divisions > QUT Business School|
|Copyright Owner:||Copyright 2014 Elsevier|
|Copyright Statement:||This is the author’s version of a work that was accepted for publication in Economics Letters. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in Economics Letters, [Vol 124, Issue 1] DOI: 10.1016/j.econlet.2014.04.020|
|Deposited On:||11 Apr 2014 00:28|
|Last Modified:||08 Dec 2014 02:32|
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