Defined contribution plans, defined benefit plans, and the accumulation of retirement wealth

• 成果类型: Article; Proceedings Paper
• 署名作者: Poterba, James; Rauh, Joshua; Venti, Steven; Wise, David
• 署名单位: Massachusetts Institute of Technology (MIT); National Bureau of Economic Research; University of Chicago; Dartmouth College; Harvard University
• 刊物名称: JOURNAL OF PUBLIC ECONOMICS
• ISSN/ISSBN: 0047-2727
• DOI: 10.1016/j.jpubeco.2007.08.004
• 发表日期: 2007
• 页码: 2062-2086
• 关键词: defined benefit pension; defined contribution pension; retirement; pension risk; 401(k) plan; lifecycle fund

摘要

The private pension structure in the United States, once dominated by defined benefit (DB) plans, is currently divided between defined contribution (DC) and DB plans. Wealth accumulation in DC plans depends on a participant's contribution behavior and on financial market returns, while accumulation in DB plans is sensitive to a participant's labor market experience and to plan parameters. This paper simulates the distribution of retirement wealth under representative DB and DC plans. It uses data from the Health and Retirement Study (HRS) to explore how asset returns, earnings histories, and retirement plan characteristics contribute to the variation in retirement wealth outcomes. We simulate DC plan accumulation by randomly assigning individuals a share of wages that they and their employer contribute to the plan. We consider several possible asset allocation strategies, with asset returns drawn from the historical return distribution. Our DB plan simulations draw earnings histories from the HRS, and randomly assign each individual a pension plan drawn from a sample of large private and public defined benefit plans. The simulations yield distributions of both DC and DB wealth at retirement. Average retirement wealth accruals under current DC plans exceed average accruals under private sector DB plans, although DC plans are also more likely to Generate very low retirement wealth outcomes. The comparison of current DC plans with more generous public sector DB plans is less definitive, because public sector DB plans are more generous on average than their private sector DB counterparts. (c) 2007 Elsevier B.V. All rights reserved.