Research Report The Potential Effects of Cash Balance on the Distribution of Pension Wealth at Midlife
Richard W. Johnson, Cori E. Uccello
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Recent pension plan conversions by numerous large employers have sparked debate about the merits of cash balance plans. This paper compares pension wealth in traditional defined benefit (DB) plans and cash balance plans for a national sample of covered Americans ages 51 to 61. The simulations indicate that replacing DB plans with cash balance plans would redistribute pension wealth from those who held long-term jobs for many years to those with multiple short-term jobs. Women at midlife in 1992 with DB coverage would have lost wealth in cash balance plans, but future cohorts of women are likely to fare better.
Research Areas Aging and retirement
Tags Pensions Retirement policy