Reforming the United States Retirement System in the Wake of the Great Recession
33 Pages Posted: 23 Aug 2011 Last revised: 30 Jan 2014
Date Written: December 14, 2009
This paper, written in fall 2009, describes the state of the U.S. retirement system as it existed during the height of the Great Recession. After describing the well-documented shift from defined benefit to defined contribution plans, and the associated shift in investment risks from employers to employees, the paper goes on to explain why these changes left the retirement of U.S. workers in an extremely vulnerable state. It further describes how the Great Recession highlighted those vulnerabilities, as well as the dire, tangible consequences for those workers primarily relying on defined contribution plans for retirement. After concluding that U.S. retirement policies are unsustainable when confronted by the realities of economic slumps, the paper goes on to analyze different policy proposals for reform, including a proposal presented by the author. Each policy proposal is evaluated on its ability to combine the benefits and minimize the drawbacks of both the defined contribution and the defined benefit plan. The American College of Employment Benefits Counsel awarded this paper the 2010 Sydney M. Perlstadt Memorial Award as the winner of its annual writing competition.
Keywords: defined contribution plans, defined benefit plans, Great Recession, retirement, 401(k), reform
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