Pension Portfolio Preferences since the Great Recession

A key component in determining the savings behavior of people is the pension plan. Very few, if any, economists will disagree that higher socio-economic classes have greater potential retirement security than lower socioeconomic classes, because high socio-economic classes have more money with which to save. However, pension plans can mitigate the savings problem for low-income groups through employer provisions. Past studies make note of the effects of pension plans on allocating savings, but they overlook what influences portfolio preferences. To modernize the research in the field of pension economics by taking into account the effects of the Great Recession, I use probit and logit models to argue that Employer Matching incentivizes individuals to invest more in stocks in their pension portfolio (i.e. a more aggressive portfolio preference) and human capital generally increases the incentive to engage in aggressive pension savings behavior. Policy implications of the results are discussed.