Working Paper: NBER ID: w18907
Authors: Julie Agnew; Joshua Hurwitz
Abstract: As more and more public pension systems are shifting away from a defined benefit only framework, the complexity of the financial decisions facing public employees is increasing. This raises some concerns about the financial literacy of participants and their ability to make informed decisions. While surveys addressing financial education in private plans are available, little is known about what types of education and advice are offered in public plans. This paper fills this gap by presenting new results from the first National Public Pension Plan Financial Education Survey. The paper focuses specifically on primary defined contribution and hybrid plans. The results indicate that some form of education or advice is offered by every surveyed plan and that the sponsoring entity is actively involved in the development of the programs. However, it appears that legal uncertainties related to advice and education may be a problem for a few plans. In addition, more rigorous evaluation methods to test programs are needed. The paper concludes with suggestions for areas of future research.
Keywords: financial education; public pension systems; retirement planning
JEL Codes: D14; G11; H75; J26
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Behavioral factors (e.g., inaction) (D91) | Effectiveness of financial education programs (G53) |
| Financial literacy (G53) | Retirement planning (J26) |
| Financial education programs offered by public pension plans (H55) | Improved financial outcomes (G19) |
| Low financial literacy (G53) | Inadequate savings outcomes (D14) |
| Financial education (G53) | Retirement outcomes (J26) |