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Defined Contribution Pension Plans: Determinants of
Participation and Contribution Rates

Gur Huberman, Sheena Iyengar and Wei Jiang


Records of 793,794 employees eligible to participate in 647 defined
contribution pension plans are studied. About 71% of them choose to
participate in the plans, and of the participants, 12% choose to contribute
the maximum allowance, $10,500. The main findings are (other than equal)

(i) participation rates, contributions and (most remarkably) savings rates
increase with compensation; on average, a $10,000 increase in compensation
is associated with a 3.7% higher participation probability and $900 higher

(ii) women's participation probability is 6.5% higher than men's and they
contribute almost $500 more then men;

(iii) particiapation probabilities are similar for employees covered and not
covered by DB plans, but those covered by DB plans contribute more to DC plans;

(iv) the availability of a match by the employer increases employees' participation
and contributions; the effect is strongest for low-income employees;

(v) participation rates, especially among low-income employees, are higher
when company stock is an investable fund.