Wharton Pension Research Council Working Papers

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Working Paper

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Labor market changes are driving employers, employees, and policymakers to confront the need for a new retirement paradigm. The old model assumed a relatively homogeneous labor force where employee benefits, particularly pensions, were designed to reward career employees after years of loyalty, effort, and productivity. When labor force growth was the norm, many firms favored hiring plentiful younger workers over retaining more costly older employees. It was in that context that employers developed defined benefit (DB) plans that benefited mainly fullcareer employees, while penalizing those who remained with the firm only a few years. Now labor force aging, combined with slower rates of workforce growth, suggest that jobs and pensions will have to be structured rather differently. This chapter overviews the factors driving the new model.


The published version of this Working Paper may be found in the 2005 publication: Reinventing the Retirement Paradigm.

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©2004 Pension Research Council of the Wharton School of the University of Pennsylvania. All Rights Reserved.

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Economics Commons



Date Posted: 30 August 2019