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Defined Contribution Plans and the Distribution of Pension Wealth
Author(s) -
EVEN WILLIAM,
MACPHERSON DAVID
Publication year - 2007
Publication title -
industrial relations: a journal of economy and society
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.61
H-Index - 57
eISSN - 1468-232X
pISSN - 0019-8676
DOI - 10.1111/j.1468-232x.2007.00480.x
Subject(s) - pension , pension plan , distribution (mathematics) , plan (archaeology) , inequality , economics , sample (material) , labour economics , wealth distribution , demographic economics , business , finance , geography , mathematical analysis , chemistry , mathematics , archaeology , chromatography
Over the past 20 years, the defined benefit (DB) plan has been replaced by the defined contribution (DC) plan as the most popular form of pension plan. This study examines the likely consequences of this transformation for both the level and distribution of future pension wealth using a sample of DB and DC plans from the Survey of Consumer Finances. The results reveal that the shift from DB to DC plans is likely to simultaneously increase the level and inequality of pension wealth at retirement. The evidence also suggests that the shift to DC plans may result in less pension wealth at retirement for low‐income workers, women, and minorities.