The Impact of Rising 401(k) Pension Coverage on Future Pension Income

William Even (evenwe@miamioh.edu) and David Macpherson

Social and Economic Dimensions of an Aging Population Research Papers from McMaster University

Abstract: Using data from the 1992 Health and Retirement Survey and the 1992 Survey of Consumer Finances, this study compares the level of benefits in 401(k), non-401(k) defined contribution (DC), and defined benefit (DB) plans. Based on current pension information regarding pension contribution rates or benefit formulas, it is shown that a shift to 401(k) plans will reduce the average level of pension benefits for low income workers but have relatively small effects on middle and high income workers. A shift to 401(k) plans would also increase the variance of benefits among low income workers, though the effect would be negligible for middle and high income workers.

Keywords: pension plan; defined benefit; defined contribution (search for similar items in EconPapers)
JEL-codes: J32 (search for similar items in EconPapers)
Pages: 40 pages
Date: 1999-11
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