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Key Findings Details

The Efficiency of Pension Menus and Individual Portfolio Choice in 401(k) Pensions
Ning Tang, Olivia S. Mitchell, Gary R. Mottola and Stephen P. Utkus
WP 2009-203

  • Most 401(k) plans offer efficient investment menus, measured by plan performance and diversification, when compared to market benchmarks.
  • We found that 401(k) plan participants had higher return losses and assumed greater risks than if they had used a naive allocation strategy.
  • Poor investment decisions accounted for over three-quarters of the total losses sustained in the average portfolio.
  • Fund sponsors should offer financial investment advice to help plan participants realize better returns.