Wharton Pension Research Council Working Papers

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Working Paper

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The global financial crisis of 2008-9 hit corporate defined benefit (DB) plans just as the new funding and other provisions of the Pension Protection Act of 2006 were being implemented. Both sponsors and the federal government reacted to the large shortfalls that developed. In this paper, the impacts and reactions are documented and the implications are evaluated. In particular, plans’ funding status dropped dramatically, sponsors reduced risk in investments, increased contributions, and changed plan design, while premiums paid to the PBGC nearly doubled, and the federal government, through regulations and legislation, provided some temporary and/or conditional funding relief. Because the relief is temporary, and discount rates are projected to remain low, the shortfalls largely remain, dependent on future developments in financial markets. For the longer-term, the heightened appreciation for risk, as affecting both DB and defined contribution plans, has led to proposals for a new, more flexible, DB-like plan type called the flexible structured plan and other changes in government policies.


The published version of this Working Paper may be found in the 2012 publication: Reshaping Retirement Security: Lessons from the Global Financial Crisis.

Working Paper Number


Copyright/Permission Statement

All findings, interpretation, and conclusions of this paper represent the views of the authors and not those of the Wharton School or the Pension Research Council. ©2011 Pension Research Council. All rights reserved.


The author acknowledges Brendan McFarland and Gaobo Pang for their contributions included here, Vishal Apte for excellent research assistance, and Susie Farris for her help with document preparation.

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Economics Commons



Date Posted: 28 June 2019