The Impact of Response Error on Participation Rates and Contributions to Defined Contribution Pension Plans

Abstract:     
The accuracy of information about coverage and contributions to defined contribution (DC) pension plans is important in understanding the economic well-being of future retirees because these plans are an increasingly important part of retirement income security. Using data from the 1996 and 2004 panels of the Survey of Income and Program Participation (SIPP) merged with information from W-2 tax records, we examine the extent to which estimated participation rates and contribution amounts to DC plans derived from SIPP reports differ from estimates obtained from tax-deferred contributions in the W-2 tax records. Findings indicate that the participation rate in DC plans is about 11 percentage-points higher when using W-2 tax records rather than survey reports. The analysis of possible sources of reporting error regarding plan participation indicates that an error is more likely to occur when missing data are imputed by the Census Bureau than in actual reports by respondents.

Number of Pages in PDF File: 16

Keywords: Reporting error, Census imputed data, Tax-deferred contributions, defined contribution pensions

JEL Classification: D3, J32, J14

Accepted Paper Series