IB#50  

Introduction

Employer-sponsored pensions are an important source of retirement income and often make the difference between having a comfortable retirement and just scraping by. However, at any given time, only about half of workers are covered by pension plans. In addition, the sea change in the nature of pension coverage from traditional defined benefit plans to 401(k)-type defined contribution plans means that the amount of income that individuals will receive from pension plans in the future is uncertain.This brief, which updates our previous work, explores who is covered by a pension plan and who is not, how much retirees receive in pension income, and how pension coverage and receipt have changed over time. The key finding is that total pension coverage has remained stagnant while the nature of coverage has continued to shift to 401(k) plans. These developments, coupled with declining levels of earnings replacement under Social Security, mean that future retirees will have to work longer if they want to maintain their pre-retirement standard of living in retirement...

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Alicia H. Munnell is the Director of the Center for Retirement Research at Boston College (CRR) and the Peter F. Drucker Professor of Management Sciences at Boston College’s Carroll School of Management, and Pamela Perun is a Research Fellow at the Initiative on Financial Security (IFS). This brief is a collaborative effort between the CRR and the IFS of the Aspen Institute. This project was supported by a grant from the Ford Foundation to IFS. The Center gratefully acknowledges support from the Aspen Institute for this project. The authors would like to thank Kelly Haverstick and the staff of CRR, and Lisa Mensah and Elena Chavéz of IFS.