Funds in Defined Contribution Retirement Plans Rise
April 25, 2011
The rich will always have a comfortable retirement; the poor will be supported by the state. For the people in the middle, the best hope of a decent pension has traditionally been to find a job that offered a final-salary pension and then stick around for the rest of their careers. For private-sector workers, such jobs have become a rarity, says The Economist.
- Over the past 10 years, global assets in defined benefit plans (such as pensions) have grown by just 2.9 percent a year, whereas those in defined contribution plans (such as 401(k)s) have increased by 7.5 percent, according to a Towers Watson study.
- Between 1979 and 2009, the share of employees in defined benefit pension plans in America fell from 62 percent to 7 percent of the total, according to the Employee Benefit Research Institute (EBRI), whereas those in defined contribution plans rose from 16 percent to 67 percent.
- Assets in American defined contribution schemes were worth $2.8 trillion at the end of 2009.
Source: "Over to You," The Economist, April 7, 2011.
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