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Redefining RetirementHow Will Boomers Fare?$
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Brigitte Madrian, Olivia S. Mitchell, and Beth J. Soldo

Print publication date: 2007

Print ISBN-13: 9780199230778

Published to Oxford Scholarship Online: September 2007

DOI: 10.1093/acprof:oso/9780199230778.001.0001

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PRINTED FROM OXFORD SCHOLARSHIP ONLINE (www.oxfordscholarship.com). (c) Copyright Oxford University Press, 2019. All Rights Reserved. An individual user may print out a PDF of a single chapter of a monograph in OSO for personal use. date: 23 August 2019

Pension Portfolio Choice and Menu Exposure

Pension Portfolio Choice and Menu Exposure

Chapter:
(p.248) Chapter 12 Pension Portfolio Choice and Menu Exposure
Source:
Redefining Retirement
Author(s):

Brigitte Madrian (Contributor Webpage)

Olivia S. Mitchell (Contributor Webpage)

Beth J. Soldo (Contributor Webpage)

Publisher:
Oxford University Press
DOI:10.1093/acprof:oso/9780199230778.003.0012

This chapter evaluates the so-called “Swedish experiment” in 2000, the traditional Swedish pay-as-you-go retirement system was partially replaced by a national defined contribution plan. The question addressed is whether participants perceived their investments in the new system as a substitute for direct investments, and whether allocating more equities in these pension accounts induced participants to change their directly-held equity investments. Results show that investors did not perceive direct investment in the equity market as a close substitute for their retirement accounts, suggesting that an individual account system will not crowd out direct equity market investment. Accordingly, the new Swedish system may actually help educate investors about the benefits of stock market participation, increasing participation and thus indirectly boosting saving.

Keywords:   Sweden, funded individual account plans, defined contribution, pay-as-you-go, individual investments, equity allocation, stock market participation

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