The Shift From Defined Benefit Plans to Defined Contribution Pension Plans
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Description
The United States has undergone a major shift in recent years from defined benefit pension plans to defined contribution plans. The shift has important consequences for most Americans because defined contribution plans, in granting decision-making authority to participants, will often fail to provide adequate retirement income to individuals with median earning capacity. The authors propose a number of legal changes to reduce some of the regulatory handicaps that have attended defined benefit plans and improve the reliability of defined contribution plans as a principal source of retirement income. The rationale of the national public-private pension system that presently covers—and has consistently covered—just under half of the Americans who work for their living is this: working people from business managers to stock clerks depend on the continuing stream of income they earn each working year to sustain themselves and their dependents; it is not in the interest of enterprises nor socially desirable to require older Americans to sustain themselves in their later years by working until the day they die; and government, through Social Security and enterprises through tax-qualified pension arrangements, should therefore provide individuals a means, over a working career, of earning a retirement benefit that enables them to approximate their pre-retirement standard of living.
Source Publication
Employee Benefits and Executive Compensation: Proceedings of the New York University 59th Annual Conference on Labor
Source Editors/Authors
David J. Reilly
Publication Date
2010
Recommended Citation
Estreicher, Samuel and Gold, Laurence, "The Shift From Defined Benefit Plans to Defined Contribution Pension Plans" (2010). Faculty Chapters. 468.
https://gretchen.law.nyu.edu/fac-chapt/468
