The Impact of Pensions on Nonpension Investment Choices

This chapter documents the investment choices of workers outside their company pensions. The Health and Retirement Study is used to evaluate how investment patterns outside pension holdings have been influenced by the shift from defined benefit to defined contribution pensions. Since workers with defined benefit plans can expect steady income in retirement, they might be thought to invest less conservatively outside their pensions. Nevertheless, the data show otherwise. Defined contribution participants also hold stock investments outside their pension portfolios. These findings suggest that increased stock holding as defined benefit plans decline in importance.