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Indiana University Bloomington

Department of Finance

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Research and Publications

Book Chapters

Tax Policy, Saving, and Pension Funding

1996, Pensions, Savings, and Capital Markets

Scott B. Smart, Joel Waldfogel


In this paper we examine whether individuals adjust their savings behavior in response to changes in employer contributions to defined benefit pension plans.  We find that as employers reduce their contributions in response to higher-than-expected returns on investments, individuals do not offset those reductions, resulting in a net reduction in saving in response to higher interest rates.


Smart, Scott B. and Joel Waldfogel (1996), "Tax Policy, Saving, and Pension Funding," in Pensions, Savings, and Capital Markets, U.S. Department of Labor.