Pareto Efficiency is a core assumption of most models of household decision-making. We test this assumption using a new dataset covering the retirement saving contributions of over a million U.S. individuals. While a vast literature has failed to reject household efficiency in developed countries, we find evidence of widespread inefficiency in our setting: retirement contributions are not allocated to the account of the spouse with the highest employer match rate. This lack of coordination cannot be explained by inertia, auto-enrollment, or simple heuristics. Instead, we find that indicators of weaker marital commitment correlate with the incidence of inefficient allocations.
This paper documents, using a newly-constructed data set, the evolution of the characteristics of employer-sponsored DC schemes. The features we focus on are their match schedules, vesting schedules, and the extent of ‘auto-features’ (i.e. presence of auto-enrollment, the level of any default contribution, and presence and details of auto-escalation). The data we construct is formed by hand-coding the details in narrative plan descriptions attached to plan fillings. Our data covers approximately 5,000 plans, covering up to 37 million participants annually, for the period 2003-2017. We document that matching schedules, when they are offered, have become more generous over time. However, the proportion of firms offering a match fell sharply during the Great Recession and the proportion offering one did not recover to its pre-financial crisis level for almost a decade. Vesting schedules for DC plans have remained essentially unchanged since 2003, while the proportion of plans with auto-enrollment has increased dramatically over the same period. We find that the vast majority of plans that offer auto-enrollment have a default rate that is substantially lower than the level that would fully exploit the match offered by the employers.