Article

Employer–Sponsored Plans: The Shift from Defined Benefit to Defined Contribution

Alicia H. Munnell

in The Oxford Handbook of Pensions and Retirement Income

Published in print July 2006 | ISBN: 9780199272464
Published online September 2009 | | DOI: http://dx.doi.org/10.1093/oxfordhb/9780199272464.003.0018

Series: Oxford Handbooks in Business and Management C

Employer–Sponsored Plans: The Shift from Defined Benefit to Defined Contribution

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In a number of countries – particularly the United States and the United Kingdom – voluntary employer-sponsored pensions play a major role in supplementing relatively modest pay-as-you-go public pensions. And in both of these countries the nature of these supplementary plans has changed dramatically, as coverage has shifted from defined benefit to defined contribution arrangements. Understanding the strengths and weaknesses of alternative employer-sponsored pension schemes is useful for two reasons. First, in both the United States and the United Kingdom the shift to defined contribution plans has occurred against a backdrop of retrenchment of the relatively modest pay-as-you-go public social insurance programs, so it is important to determine the extent to which future retirees may be at risk. Second, many Continental European countries with generous pay-as-you-go public schemes have signalled an interest in moving some responsibility for retirement income to funded private plans, primarily using a defined contribution format, so it is helpful to learn what works and what does not.

Keywords: employer-sponsored plans; defined benefits; defined contribution; United States; United Kingdom; retirement income

Article.  8220 words. 

Subjects: Business and Management ; Business Strategy

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