Podcast Center
Video Center
Webcasts
Resource Center
Events
July 26, 2012 at 09:53 AM
In a time when both public- and private-sector jobs are increasingly insecure and defined benefit (DB) pension plans are becoming increasingly scarce, a study conducted by the National Institute on Retirement Security (NIRS) has found that the now somewhat old-fashioned concept of DB pensions are a major factor in keeping older Americans out of poverty. Meanwhile, public sector employees are less confident that they will be able to retire or afford health care in retirement.
In the report titled “The Pension Factor 2012: Assessing the Role of Defined Benefit Plans in Reducing Elder Economic Hardships,” an update of a similar study conducted in 2009, older households that did not receive DB pensions experienced rates of poverty approximately nine times greater than those among older households with DB pension income in 2010. That increased from a rate of six times greater in 2006.
The report, authored by Dr. Frank Porell, professor of gerontology at the University of Massachusetts-Boston, and Diane Oakley, executive director at NIRS, offered some other surprising revelations, even when corrected for such factors as education, work history, age, race, marital status and other elements that otherwise play a large role in determining whether a household will fall into poverty or not.
The savings to taxpayers from families able to avoid the need for public assistance, thanks to DB plans, was $7.9 billion. DB plans also reduced the disparity in income among households when categorized by gender or race, while households lacking DB plans experienced a much wider range of income—or the lack of it. And households in the northeast and Midwest, former bastions of manufacturing, were much more likely to receive DB funds than those in either the south or the west.
