ALBERT FEUER, Law Offices of Albert Feuer
Email: afeuer@aya.yale.edu

In Kennedy v. DuPont Savings and Investment Plan (the "DuPont Plan"), 2009 U.S. LEXIS 869 (January 26, 2009), the Supreme Court appeared to proclaim a "bright-line rule" that plan documents determine ERISA plan distributions. However, the Court blurred the bright-line rules applicable to (1) plan entitlements, (2) the alienation of pension benefits, (3) qualified domestic relations orders, and (4) plan distributions. The basis for much of this blurring would vanish if the U. S. Treasury ("the Treasury") and the U. S. Department of Labor ("the DOL") resumed their pre-Kennedy approach to many of these issues. Suggestions to improve post-Kennedy employee benefit practices are set forth for the Treasury and the DOL, for plan sponsors, for plan administrators, and for representatives of plan participants and potential plan beneficiaries.

ANNAMARIA LUSARDI, Dartmouth College - Department of Economics, National Bureau of Economic Research (NBER)
Email: annamaria.lusardi@dartmouth.edu
PUNAM KELLER, Dartmouth College - Tuck School of Business
Email: Punam.Keller@Tuck.Dartmouth.edu
ADAM M. KELLER, Dartmouth College
Email: adam.keller@Dartmouth.edu

In this study, we use a social marketing approach to develop a planning aid to help new employees at a not-for-profit institution contribute to supplementary pensions. We employed different methods, such as surveys, focus groups and in-depth interviews, to listen to employees' needs and difficulties with saving. Moreover, we targeted specific groups that were less likely to save and contribute to supplementary pensions, such as women and low-income employees. The program we developed is not only effective but also inexpensive. While this program was implemented at a single institution, it is suitable to be applied to a variety of employers and demographic groups.

ORLY LOBEL, University of San Diego - School of Law, Harvard Law School
Email: lobel@sandiego.edu
ON AMIR, University of California, San Diego - Rady School of Management
Email: oamir@ucsd.edu

Research in the field of behavioral economics indicates that humans stumble in their decisionmaking in predictable ways that can often be corrected by a gentle nudge from the appropriate regulatory authority. Two new books -- Dan Ariely's Predictably Irrational and Richard Thaler and Cass Sunstein's Nudge -- recount the findings of behavioral research on predictable patterns in human decisionmaking and lay the foundation for regulation through choice architecture that recognizes these human stumbles. In this Review Essay, we provide a critical account of remaining gaps in behavioral economics research and suggest that some types of behavioral insights may be better translated into law and policy reforms than others. We further argue that Nudge's concept of libertarian paternalism both understates and exaggerates the jurisprudential and policy implications of regulatory innovation. While key insights from the behavioral field may lead to effective regulation systems with minimal intervention, these systems entail costs, have distributional effects, solve macro coordination problems, and are inevitably value driven. Moreover, policy nudges serve merely as a first stage of sequenced regulation where, inevitably, more coercive measures are required in later stages. The idea of choice architecture is then related to the growing body of regulatory studies collectively termed new governance. We conclude with a call for a more nuanced account of the range of mechanisms as well as the limits, costs, and consequences of applying lessons from the field of behavioral economics to law.

MARIACRISTINA DE NARDI, Federal Reserve Bank of Chicago, National Bureau of Economic Research (NBER) - Public Economics
Email: mariacristina.denardi@chi.frb.org
ERIC FRENCH, Federal Reserve Bank of Chicago
Email: eric.french@frbchi.org
JOHN BAILEY JONES, State University of New York
Email: jbjones@albany.edu

Rich people, women, and healthy people live longer. We document that this heterogeneity in life expectancy is large, and we use an estimated structural model to assess its effect on the elderly's saving. We find that the differences in life expectancy related to observable factors such as income, gender, and health have large effects on savings, and that these factors contribute by similar amounts. We also show that the risk of outliving one's expected lifespan has a large effect on the elderly's saving behavior.

MICHAEL BAKER, University of Toronto - Department of Economics, National Bureau of Economic Research (NBER)
Email: baker@chass.utoronto.ca
JONATHAN GRUBER, Massachusetts Institute of Technology (MIT) - Department of Economics, National Bureau of Economic Research (NBER)
Email: gruberj@mit.edu
KEVIN MILLIGAN, University of British Columbia - Department of Economics, National Bureau of Economic Research (NBER)
Email: kevin.milligan@ubc.ca

A large international literature has documented the labor market distortions associated with social security benefits for near-retirees. In this paper, we investigate the 'other side' of social security programs, seeking to document improvements in wellbeing arising from the provision of public pensions. To the extent households adjust their savings and employment behavior to account for enhanced retirement benefits, the positive impact of the benefits may be crowded out. We proceed by using the large variation across birth cohorts in income security entitlements in Canada that arise from reforms to the programs over the past 35 years. This variation allows us to explore the effects of benefits on elderly well-being while controlling for other factors that affect well-being over time and by age. We examine measures of income, consumption, poverty, and happiness. For income, we find large increases in income corresponding to retirement benefit increases, suggesting little crowd out. Consumption also shows increases, although smaller in magnitude than for income. We find larger retirement benefits diminish income poverty rates, but have no discernable impact on consumption poverty measures. This could indicate smoothing of consumption through savings or other mechanisms. Finally, our limited happiness measures show no definitive effect.

KAY BLAUFUS, Free University of Berlin (FUB) - Department of Business and Economics
Email: kblaufus@wiwiss.fu-berlin.de
RENATE ORTLIEB, affiliation not provided to SSRN
Email: renate.ortlieb@fu-berlin.de

We theoretically and empirically analyze the influence of tax complexity on the employee's decision concerning company pension plans. Our model also considers employer signaling and information intermediation by various actors. The main result of our empirical analysis is that if tax complexity is high, then only a small proportion of the study participants bases their decision on their after-tax return. This proportion increases significantly if tax complexity is low. However, even in a simple tax system, many people do not base their decisions on after-tax returns, but instead follow the advice of an independent product rating agency or a works council representative.

LAURENT E. CALVET, HEC School of Management - Department of Finance and Economics, National Bureau of Economic Research (NBER)
Email: calvet@hec.fr
JOHN Y. CAMPBELL, Harvard University - Department of Economics, National Bureau of Economic Research (NBER)
Email: john_campbell@harvard.edu
PAOLO SODINI, Stockholm School of Economics - Department of Finance
Email: Paolo.Sodini@hhs.se

This paper constructs an index of financial sophistication that, in comprehensive data on Swedish households, best explains a set of three investment mistakes: underdiversification, risky share inertia, and the tendency to sell winning stocks and hold losing stocks (the disposition effect). The index of financial sophistication increases strongly with financial wealth and household size, and to a lesser extent with education and proxies for financial experience. The index is strongly positively correlated with the share of risky assets held by a household.

SWARN CHATTERJEE, University of Georgia
Email: swarn@uga.edu
VELMA ZAHIROVIC-HERBERT, University of Georgia
Email: vherbert@uga.edu

This study examines retirement plan participation and savings behavior for American public and private sector employees using the Panel Study of Income Dynamics (PSID) data set. This paper also examines the determinants of preference for a diversified portfolio within the retirement plans. The findings of this study indicate that the population's plan participation increases with age, income, and education level. The public sector employees are more likely than others to participate in defined benefits plans. Conversely, they are less likely to participate in the defined contribution plans. Also, the public sector employees who participate in defined contribution plans hold lower amounts within their retirement accounts. The public sector employees are more likely to diversify their retirement portfolios or allocate them in bonds or annuities and are less likely to hold all or most of their wealth in stocks. Preference for diversification also increases with age, income and educational attainment.

GORDON L. CLARK, Oxford University Center for the Environment
Email: gordon.clark@ouce.ox.ac.uk
JANELLE KNOX-HAYES, University of Oxford
Email: janelle.knox@ouce.ox.ac.uk

Concern about the competence of individual decision-makers has prompted governments and pension plan sponsors to take advantage of the insights gleaned from the behavioural revolution. Auto-enrolment, target-date and related investment strategies may effectively counter behavioural biases such as inertia and the lack of attention paid to financial planning. Nonetheless, some participants may expect consultation when plan sponsors and management implement 'default' strategies and the like. Here, we assess the expectations of plan participants drawn from a national representative sample of UK residents who participate in defined contribution and personal pension schemes. It is found that respondents who expressed an interest in a high degree of consultation over the pathway to retirement were older, have higher incomes, and recognised the significance of retirement saving schemes for their long term welfare. A significant number of respondents would not or could not offer an opinion on the desirability of consultation. These respondents can be characterised as either discouraged or disenchanted or disaffected-socio-economic variables were not good predictors of these respondents' opinions and attitudes to consultation. Our results support, in part, the 'new' paternalism but raise questions about the blanket application of related measures to heterogeneous groups of plan participants.