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The Disappearing Defined Benefit Pension and its Potential Impact on the Retirement Incomes of Boomers


  • Barbara A. Butrica
  • Howard M. Iams
  • Karen E. Smith
  • Eric J. Toder


The long-term shift in coverage from defined benefit (DB) pensions to defined contribution (DC) plans may accelerate rapidly as more large companies freeze their DB pensions and replace them with new or enhanced DC plans. This paper uses the Model of Income in the Near Term to simulate the impact of an accelerated transition from DB to DC pensions on the distribution of retirement income among boomers. A scenario in which employers freeze all remaining private sector DB plans and a third of all state and local plans over the next five years will on balance produce more losers than winners among boomers and reduce their average incomes at age 67. Income changes will be largest among higher-income boomers, who have the highest DB coverage rates and projected pension incomes. Furthermore, the numbers of winners and losers and net income changes are much greater for the last wave of boomers (born between 1961 and 1965) than for earlier boomers. Younger boomers are most likely to have their DB pensions frozen with relatively little job tenure and to lose their high accrual years for DB pension wealth, but also to have relatively more years to accumulate DC pension wealth before retirement...

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  • Barbara A. Butrica & Howard M. Iams & Karen E. Smith & Eric J. Toder, 2009. "The Disappearing Defined Benefit Pension and its Potential Impact on the Retirement Incomes of Boomers," Working Papers, Center for Retirement Research at Boston College wp2009-2, Center for Retirement Research.
  • Handle: RePEc:crr:crrwps:wp2009-2

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    References listed on IDEAS

    1. Butrica, Barbara A. & Johnson, Richard W. & Smith, Karen E. & Steuerle, C. Eugene, 2006. "The Implicit Tax on Work at Older Ages," National Tax Journal, National Tax Association, vol. 59(2), pages 211-234, June.
    2. Alicia H. Munnell & Mauricio Soto, 2007. "Why Are Companies Freezing Their Pensions?," Working Papers, Center for Retirement Research at Boston College wp2007-22, Center for Retirement Research, revised Dec 2007.
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    Cited by:

    1. Mitchell Marsden & Cathleen Zick & Robert Mayer, 2011. "The Value of Seeking Financial Advice," Journal of Family and Economic Issues, Springer, vol. 32(4), pages 625-643, December.
    2. James M. Poterba, 2014. "Retirement Security in an Aging Population," American Economic Review, American Economic Association, vol. 104(5), pages 1-30, May.
    3. repec:eee:hapoch:v1_865 is not listed on IDEAS
    4. Rothbaum Jonathan, 2017. "Bridging a Survey Redesign Using Multiple Imputation: An Application to the 2014 CPS ASEC," Journal of Official Statistics, De Gruyter Open, vol. 33(1), pages 187-206, March.
    5. Karen Smith & Mauricio Soto & Rudolph G. Penner, 2009. "How Seniors Change Their Asset Holdings During Retirement," Working Papers, Center for Retirement Research at Boston College wp2009-31, Center for Retirement Research, revised Dec 2009.
    6. Gustafson, Matthew T., 2017. "The market sensitivity of retirement and defined contribution pensions: Evidence from the public sector," Journal of Public Economics, Elsevier, vol. 145(C), pages 1-13.
    7. Gopi Shah Goda & John B. Shoven & Sita Nataraj Slavov, 2012. "Does Stock Market Performance Influence Retirement Intentions?," Journal of Human Resources, University of Wisconsin Press, vol. 47(4), pages 1055-1081.
    8. Devlin-Foltz, Sebastian & Henriques, Alice M. & Sabelhaus, John, 2015. "The Evolution of Retirement Wealth," Finance and Economics Discussion Series 2015-9, Board of Governors of the Federal Reserve System (U.S.).
    9. James M. Poterba, 2014. "Retirement Security in an Aging Society," NBER Working Papers 19930, National Bureau of Economic Research, Inc.
    10. Parsiad Azimzadeh & Peter A. Forsyth, 2015. "The existence of optimal bang-bang controls for GMxB contracts," Papers 1502.05743,, revised Nov 2015.

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