Defined Contribution Plans and the Distribution of Pension Wealth
William E. Even
Miami University; Institute for the Study of Labor (IZA)
David A. MacPherson
Trinity University; Institute for the Study of Labor (IZA)
Industrial Relations: A Journal of Economy and Society, Vol. 46, No. 3, pp. 551-581, July 2007
Over the past 20 years, the defined benefit (DB) plan has been replaced by the defined contribution (DC) plan as the most popular form of pension plan. This study examines the likely consequences of this transformation for both the level and distribution of future pension wealth using a sample of DB and DC plans from the Survey of Consumer Finances. The results reveal that the shift from DB to DC plans is likely to simultaneously increase the level and inequality of pension wealth at retirement. The evidence also suggests that the shift to DC plans may result in less pension wealth at retirement for low-income workers, women, and minorities.
Number of Pages in PDF File: 31Accepted Paper Series
Date posted: June 18, 2007
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