Investment Returns: Defined Benefit vs. Defined Contribution Plans


The brief’s key findings are:

  • The analysis compares returns by plan type from 1990-2012 using data from the U.S. Department of Labor’s Form 5500.
  • During this period, defined benefit plans outperformed 401(k)s by an average of 0.7 percent per year, even after controlling for plan size and asset allocation.
  • In addition, much of the money accumulated in 401(k)s is eventually rolled over into IRAs, which earn even lower returns.
  • One reason for the lower returns in 401(k)s and IRAs is higher fees, which should be a major concern as they can sharply reduce a saver’s nest egg over time.