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The Decline of Defined Benefit Retirement Plans and Asset Flows

In: Social Security Policy in a Changing Environment

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Author Info

  • James M. Poterba
  • Steven F. Venti
  • David A. Wise

Abstract

Demographic change can have an important effect on the stock of assets held in defined benefit pension plans. This paper projects the impact of changes in the age structure of the U.S. population between 2005 and 2040 on the stock of assets held by these plans. It projects the contributions to and withdrawals from these plans. These projections are combined with estimates of the future evolution of assets in 401(k)-like plans to describe the prospective impact of demographic change on the stock of assets in retirement plans. Information on demography-linked changes in asset demand is a critical input to evaluating the potential impact of population aging on asset returns.

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This chapter was published in:

  • Jeffrey R. Brown & Jeffrey B. Liebman & David A. Wise, 2009. "Social Security Policy in a Changing Environment," NBER Books, National Bureau of Economic Research, Inc, number brow08-1, July.
    This item is provided by National Bureau of Economic Research, Inc in its series NBER Chapters with number 4549.

    Handle: RePEc:nbr:nberch:4549

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    References

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    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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    1. James M. Poterba & Steven F. Venti & David A. Wise, 2008. "New Estimates of the Future Path of 401(k) Assets," NBER Chapters, National Bureau of Economic Research, Inc, in: Tax Policy and the Economy, Volume 22, pages 43-80 National Bureau of Economic Research, Inc.
    2. John Geanakoplos & Michael Magill & Martine Quinzii, 2002. "Demography and the Long-run Predictability of the Stock Market," Cowles Foundation Discussion Papers, Cowles Foundation for Research in Economics, Yale University 1380R, Cowles Foundation for Research in Economics, Yale University, revised Jul 2004.
    3. Axel B�Rsch-Supan & Alexander Ludwig & Joachim Winter, 2006. "Ageing, Pension Reform and Capital Flows: A Multi-Country Simulation Model," Economica, London School of Economics and Political Science, London School of Economics and Political Science, vol. 73(292), pages 625-658, November.
    4. Robin Brooks, 2002. "Asset-Market Effects of the Baby Boom and Social-Security Reform," American Economic Review, American Economic Association, American Economic Association, vol. 92(2), pages 402-406, May.
    5. Krueger, Dirk & Ludwig, Alexander, 2006. "On the consequences of demographic change for rates of returns to capital, and the distribution of wealth and welfare," CFS Working Paper Series 2006/18, Center for Financial Studies (CFS).
    6. James M. Poterba & Steven F. Venti & David A. Wise, 2001. "The Transition to Personal Accounts and Increasing Retirement Wealth: Macro and Micro Evidence," NBER Working Papers 8610, National Bureau of Economic Research, Inc.
    7. Daniel Bergstresser & Mihir A. Desai & Joshua Rauh, 2004. "Earnings Manipulation and Managerial Investment Decisions: Evidence from Sponsored Pension Plans," NBER Working Papers 10543, National Bureau of Economic Research, Inc.
    8. John Beshears & James J. Choi & David Laibson & Brigitte C. Madrian, 2009. "The Importance of Default Options for Retirement Saving Outcomes: Evidence from the United States," NBER Chapters, National Bureau of Economic Research, Inc, in: Social Security Policy in a Changing Environment, pages 167-195 National Bureau of Economic Research, Inc.
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    Cited by:
    1. Shlomo Benartzi & Richard Thaler, 2007. "Heuristics and Biases in Retirement Savings Behavior," Journal of Economic Perspectives, American Economic Association, American Economic Association, vol. 21(3), pages 81-104, Summer.
    2. James M. Poterba & Steven F. Venti & David A. Wise, 2010. "The Rise of 401(k) Plans, Lifetime Earnings, and Wealth at Retirement," NBER Chapters, National Bureau of Economic Research, Inc, in: Research Findings in the Economics of Aging, pages 271-304 National Bureau of Economic Research, Inc.
    3. Brunetti Marianna, 2007. "Population Ageing, Household Portfolios and Financial Asset Returns: a Survey of the Literature," Politica economica, Società editrice il Mulino, Società editrice il Mulino, issue 2, pages 171-208.
    4. Jonathan Skinner, 2009. "Comment on "The Decline of Defined Benefit Retirement Plans and Asset Flows"," NBER Chapters, National Bureau of Economic Research, Inc, in: Social Security Policy in a Changing Environment, pages 379-384 National Bureau of Economic Research, Inc.
    5. James Poterba & Steven Venti & David A. Wise, 2007. "New Estimates of the Future Path of 401(k) Assets," NBER Working Papers 13083, National Bureau of Economic Research, Inc.
    6. James Poterba & Steven F. Venti & David A. Wise, 2007. "Rise of 401(k) Plans, Lifetime Earnings, and Wealth at Retirement," NBER Working Papers 13091, National Bureau of Economic Research, Inc.

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