Wharton Pension Research Council Working Papers
 

Title

The Declining Role of Private Defined Benefit Pension Plans: Who is Affected, and How

Document Type

Working Paper

Date of this Version

9-1-2009

Abstract

This chapter analyzes the impact of future freezes among corporate defined benefit (DB) pension plans. We simulate the impact on expected future pension wealth by assuming all existing private DB plans immediately freeze accruals for new employees. While this indicates the potential reduction in retirement wealth attributable to such plans, it does not recognize that sponsors freezing accruals may increase employer contributions to existing defined contribution (DC) plans or establish new DC plans. Using an empirical distribution of enhanced contributions to DC plans from sponsors freezing their DB plans, we simulate the nominal annuity that could be purchased at retirement age from these enhanced contributions. We then back out the net pension loss experienced by employees in the future.

Comments

The published version of this Working Paper may be found in the 2010 publication: Reorienting Retirement Risk Management.

Working Paper Number

WP2009-18

Copyright/Permission Statement

Opinions and conclusions are solely those of the author(s) and do not reflect views of the institutions supporting the research, with whom the authors are affiliated, or the Pension Research Council. Copyright 2009 © Pension Research Council of the Wharton School of the University of Pennsylvania. All rights reserved.

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Date Posted: 23 August 2019