Defined Contribution Plan Dominance Grows Across Sectors and Employer Sizes, While Mega Defined Benefit Plans Remain Strong: Where We are and Where We are Going

1997 ◽  
Author(s):  
Kelly Olsen ◽  
Jack VanDerhei
Keyword(s):  
Defined Benefit ◽  
Defined Contribution ◽  
Defined Benefit Plans ◽  
Defined Contribution Plan

The decline of defined benefit plans and job tenure

2008 ◽  
Vol 8 (3) ◽  
pp. 259-290 ◽  
Author(s):  
ALLISON SCHRAGER
Keyword(s):  
Pension Plan ◽  
Job Turnover ◽  
Defined Benefit ◽  
Defined Contribution ◽  
Job Tenure ◽  
Benefit Plan ◽  
Job Separation ◽  
Defined Benefit Plans ◽  
Defined Contribution Pension Plan ◽  
Defined Contribution Plan

AbstractThis paper investigates the consequences of relying on assets accumulated in a defined contribution pension plan compared to an annuity based on salary from a defined benefit plan. Although a defined contribution plan varies with asset returns, it may be more desirable than a defined benefit plan when wage variability and job turnover are adequately considered. It is found that both job separation rates and wage variance increased in the 1990s. The new calibrations of these variables are used in a life-cycle model where a worker chooses between a defined benefit and a defined contribution plan. It is shown that the increase in job turnover made defined contribution the dominant pension plan.

The Inevitable Rise in Dual-Income Households and the Intertemporal Effects on Labor Markets

2020 ◽  
Vol 52 (2) ◽  
pp. 64-76 ◽  
Author(s):  
Tesa E. Leonce
Keyword(s):  
Labor Markets ◽  
Housing Prices ◽  
Defined Benefit ◽  
Defined Contribution ◽  
Dual Earner ◽  
Societal Welfare ◽  
Defined Benefit Plans ◽  
Dual Income ◽  
Care Costs ◽  
Dual Earners

The number of dual-income households has been steadily increasing over the past few decades. This study supports the hypothesis that given a household’s desire to remain above a minimum threshold standard of living, the rise in the number of dual-earner households is inevitable mostly due to inflationary pressures in product markets including rising housing prices and child care costs coupled with relatively flat wage trends. Mitigating uncertainty and risk associated with shifts in retirement plan offerings—moving away from defined benefit plans such as pensions toward defined contribution options such as 401(k) plans—was also cited as a factor contributing to the rising number of dual earners. This study highlights the costs and benefits of dual-earning decisions and the intertemporal implications for households, labor markets and overall societal welfare.

scholarly journals Portability Rewards And Avoidance Of Longevity Risk: Factors In The Growth Of Defined Contribution Plans

2010 ◽  
Vol 8 (10) ◽  
Author(s):  
Beverley Hollingsworth ◽  
Wei Wang
Keyword(s):  
Investment Strategy ◽  
Longevity Risk ◽  
Defined Benefit ◽  
Defined Contribution ◽  
Insufficient Evidence ◽  
Font Size ◽  
Defined Contribution Plans ◽  
Investment Returns ◽  
Defined Benefit Plans ◽  
The Relationship

<p class="MsoNormal" style="text-align: justify; margin: 0in 0.5in 0pt; mso-pagination: none;"><span style="color: black; font-size: 10pt; mso-themecolor: text1;"><span style="font-family: Times New Roman;">The decline in defined benefit plans has been offset by a significant growth in defined contribution plans. An important consideration in this phenomenon lies in the fact that employees view this shift as a tradeoff between longevity risk and portability rewards. Companies are shifting from defined benefit plans to avoid the longevity risks associated with such plans. On the other hand, in some instances when given the option, employees chose defined contribution plans, due to the associated portability rewards where participants have a choice of rolling over, or transferring plans from former employers.. This paper examined research relevant in assessing factors contributing to growth in defined contribution with particular interest in 401(k)s and the relationship between investment returns, the availability of loans, and investment strategy that may affect plan growth. It is concluded that there is insufficient evidence for assuming a relationship between investment returns, loan availability and investment strategy and the growth of defined contribution plans. </span></span></p>

scholarly journals Lessons for public pensions from Utah's move to pension choice

2016 ◽  
Vol 15 (3) ◽  
pp. 285-310 ◽  
Author(s):  
ROBERT L. CLARK ◽  
EMMA HANSON ◽  
OLIVIA S. MITCHELL
Keyword(s):  
Cost Savings ◽  
Pension Plan ◽  
The State ◽  
Defined Benefit ◽  
Defined Contribution ◽  
Public Employment ◽  
Potential Cost ◽  
Active Choice ◽  
Defined Contribution Plan ◽  
New Hires

AbstractWe explore what happened when the state of Utah moved away from its traditional defined benefit pension. In its place, it offered new hires a choice between a conventional defined contribution plan and a hybrid plan option, where the latter has both a guaranteed benefit component and a defined contribution plan where employees bear investment risk. We show that around 60% of new hires failed to make any active choice and, as a result, were automatically defaulted into the hybrid plan. Slightly more than half of those who made an active choice elected the hybrid plan. Post-reform, employees who failed to actively elect a primary retirement plan were also far less likely to enroll in a supplemental retirement account, compared with new hires who actively selected a plan. We also find that employees hired following the reform were more likely to leave public employment, resulting in higher separation rates. This could reflect a reduction in the desirability of public employment under the new pension design and an improving economic climate in the state. Our results imply that public pension reformers must consider employee responses in addition to potential cost savings, when developing and enacting major pension plan changes.

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