People do not have fewer retirement assets as the retirement-account trend moves to defined contribution plans from defined benefit plans, according to research by the Center for Retirement Research at Boston College.
“The accumulation of retirement assets has not declined as a result of the shift from defined benefit to defined contribution plans,” noted the analysis, which is posted on the center’s website.
The percentage of salary going toward retirement has declined slightly, the authors wrote based on their review of federal data from 1984 through 2012. “On the other hand, if returns on accumulations are included, the annual change in pension wealth appears to have remained relatively steady.”
However, the authors added: “What has changed is not the amount of savings going on but rather who is bearing the risk.”
In DC plans, the investment risk is shifted to participants, forcing them “to figure out how to make the accumulated assets last for a lifetime,” the authors wrote. “So while the aggregate data suggest that accumulations have not declined, the pattern among individuals may have changed substantially.”
The research report was written by Alicia Munnell, director of the Center for Retirement Research; Jean-Pierre Aubry, assistant director of state and local research at the center; and Caroline Crawford, a research associate at the center.