Two academics from the Wharton School of Business have produced a paper suggesting one large plan's effort to streamline its defined contribution plan created potential savings of $20.2 million for participants over a 20-year period, or $9,400 per participant.
Previous research has been mixed on how the number of lineup options influences participant behavior and outcomes, but none of that research has examined how participants react to a substantial reduction in options, claim Donald Keim and Olivia Mitchell in the paper, prepared for Wharton's Pension Research Council.
Before 2013, the studied plan, a large nonprofit "research and teaching institution," offered almost 90 mutual fund options, ranging from equity to target-date funds, to bond index funds, REITs and commodity funds.
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