Defined Contribution Plans And The Challenge Of Financial Illiteracy

Defined Contribution Plans And The Challenge Of Financial Illiteracy


In this paper the authors analyze data from the 2015 National Financial Capability Study to show that people whose only exposure to investment decisions is by virtue of their participation in an employer-sponsored 401(k) plan are poorly equipped to make sound investment decisions. In response to this concern, they propose mandated employer-provided financial education to address limited employee financial literacy.

They identify and discuss three requirements that a financial education program should incorporate—a self-assessment, minimum substantive components, and timing. Formalizing the employer role in evaluating and increasing financial literacy among plan participants is a key step in providing retirement plan participants with the resources necessary to manage important decisions regarding retirement planning and, ultimately, for enhancing the financial security of American workers.

Full content of the publication


Employment Financial literacy Retirement and pensions


Jill E. Fisch

Annamaria Lusardi

Academic Director, Global Financial Literacy Excellence Center (GFLEC)

Andrea Hasler

Additional Information

Date published


Document Type



United States





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