Participant Direction in Defined Contribution Plans

This document is about an analysis of the rise of participant-directed defined contribution pension plans in the US during the 1990s. The authors examine the factors that influence whether a worker has a participant-directed plan, how participant direction affects the investment of pension assets, and the impact of participant direction on pension fund performance. The study finds that participant direction leads to a shift away from employer stock and towards other equity investments, and that participant-directed plans have higher risk-adjusted returns compared to employer-directed plans.