The Stampede Toward Defined Contribution Pension Plans: Fact or Fiction?
14 Pages Posted: 14 Apr 2007 Last revised: 16 Aug 2007
Date Written: August 1989
This paper questions recent conclusions that the trend towards defined contribution plans and away from defined benefit plans is due to increased pension regulation and/or a changing economic environment. Using data from IRS 5500 filings by pension administrators, we find that at least half of the trend is due to a shifting employment mix toward firms with industry, size, and union status characteristics which have historically been associated with lower defined benefit plan rates. Not more than half of the trend can be attributed to a "stampede" by firms with given industry, size, and union status characteristics toward defined contribution pension coverage.
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