The disappearing defined benefit pension and its potential impact on the retirement incomes of boomers

The

disappearing defined benefit pension and its potential impact on the retirement incomes of boomers

Butrica

Barbara A.

Butrica, Barbara A.

Author

Iams

Howard M.

Iams, Howard M.

Author

Smith

Karen E.

Smith, Karen E.

Author

Toder

Eric J.

Toder, Eric J.

Author

text

working paper

Chestnut Hill, Mass. Center for Retirement Research at Boston College20092009monographic

Chestnut Hill, Mass.

Center for Retirement Research at Boston College

2009

monographic

Englisheng

English

eng

electronicapplication/pdfborn digital

electronic

application/pdf

born digital

The long-term shift in coverage from defined benefit (DB) pensions to defined contribution (DC) plans may accelerate rapidly as more large companies freeze their DB pensions and replace them with new or enhanced DC plans. This paper uses the Model of Income in the Near Term to simulate the impact of an accelerated transition from DB to DC pensions on the distribution of retirement income among boomers. A scenario in which employers freeze all remaining private sector DB plans and a third of all state and local plans over the next five years will on balance produce more losers than winners among boomers and reduce their average incomes at age 67. Income changes will be largest among higher-income boomers, who have the highest DB coverage rates and projected pension incomes. Furthermore, the numbers of winners and losers and net income changes are much greater for the last wave of boomers (born between 1961 and 1965) than for earlier boomers. Younger boomers are most likely to have their DB pensions frozen with relatively little job tenure and to lose their high accrual years for DB pension wealth, but also to have relatively more years to accumulate DC pension wealth before retirement...

Barbara A. Butrica, Howard M. Iams, Karen E. Smith, and Eric J. Toder.

CRR WP2009-2

CRR WP

2009-2

http://crr.bc.edu/images/stories/Working_Papers/wp_2009_2.pdf

MChBEnglisheng

MChB

Englisheng

English

eng