The Decline of Defined Benefit Retirement Plans and Asset Flows

Steven F. Venti and David A. Wise

Edited by James M. Poterba

in Social Security Policy in a Changing Environment

Published by University of Chicago Press

Published in print June 2009 | ISBN: 9780226076485
Published online February 2013 | e-ISBN: 9780226076508 | DOI:
The Decline of Defined Benefit Retirement Plans and Asset Flows

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This chapter examines the effect of population aging on the demand for financial assets in retirement saving plans, particularly defined benefit (DB) plans, in the United States. Focusing on DB assets alone suggests that an aging population, in conjunction with a shift away from DB plans, will lead to a decline in the real value of pension assets averaged across all retirees in future cohorts. The findings underscore the need for further analysis of the factors that determine the diffusion of 401(k) plans across corporations, especially small companies with low-wage workers, as well as the contribution behavior and withdrawal behavior of 401(k) participants. The growing role of 401(k)-type plans in the retirement landscape suggests that understanding asset accumulation and draw-down in these plans is a critical component of any analysis of the effect of demographic change on financial markets.

Keywords: defined benefit; DB; assets; retirement saving plans; 401(k) plans

Chapter.  15082 words.  Illustrated.

Subjects: Public Economics

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