Racial Differences in Pension Product Consumption

• In Event: 240 - Section on Consumers and Consumption Roundtable Session (one-hour).
  In Refereed Roundtable: Table 02. Spending and Expenditures

Abstract

The present study documents and models Blacks and Latinos’ pension participation likelihood relative to non-Hispanic Whites. Multivariate regression methods were used to analyze data from the 1996 Survey of Income and Program Participation (SIPP) panel which was collected from April 1996 to March 2000. Results indicate that non-Hispanic Blacks and Hispanics were significantly less likely to participate in pension plans (defined contributions plans such as 401k and 403b) than non-Hispanic White Americans. In multivariate analyses where demographic background, industry and occupation characteristics, availability of affordable pension plans, and eligibility statuses were specified, there was still a significant net racial effect in predicting the DC pension participation likelihood. Several policy recommendations were suggested to bolster Black and Latino pension participation: covering part-time and seasonal workers, offering tax credits to low-income workers, requiring automatic enrollment, and enfranchising Latinos into the U.S. financial and Social Security systems.

Author

• Sung Chang Chun, Mercy College-Ohio