A defined benefit pension plan really can be important to protecting a middle-income or even relatively high-income retiree against falling into poverty.

Having pension benefits in the top 25% reduces the likelihood that a low-income worker will be unable to pay health care costs and basic living expenses in retirement to about 45%, down from about 85% for low-income workers with no pension benefits.

For a high-income worker – one with income in the top 25% — having pensions in the “highest quartile” reduces the likelihood of having inadequate income in retirement to about 5%, from about 25% for high-income workers with no pension benefits.

Jack VanDerhei, a researcher at the Employee Benefit Research Institute (EBRI), Washington, has published those estimates in a study conducted using the EBRI Retirement Security Projection Model.

The model is based on data from EBRI surveys, government surveys, plan administrators’ databases, and the Form 5500 reports that plans file with the government.

- Allison Bell

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