The Evolving Pension System examines the foundations and the future of the private pension system. It provides a broad overview of the underlying assumptions, characteristics, and effects of existing pension policy, as well as alternative views on how public policy toward pensions should evolve in the future. Contributors include Robert Clark (North Carolina State University), Eric Engen (Federal Reserve Board), William G. Gale (Brookings Institution), Theodore Groom (Groom Law Group, Chartered), Daniel Halperin (Harvard), Alicia Munnell (Boston College), Leslie Papke (Michigan State University), Joseph Quinn (Boston College), Sylvester Schieber (Watson Wyatt), John B. Shoven (Stanford), and Jack Vanderhei (Temple University and EBRI). William G. Gale is the Joseph A. Pechman Fellow in the Economic Studies program at the Brookings Institution. John B. Shoven is Charles R. Schwab Professor at Stanford University. Mark J. Warshawsky is director of research at the TIAA-CREF Institute.

This Issue Brief examines trends in employment-based defined benefit (DB) and defined contribution (DC) pension plans since 1975. The analysis relies extensively on Form 5500 reports submitted by plan sponsors and published by the Department of Labor, although other sources of information are used. The Issue Brief goes beyond a general description of trends in the number of qualified private-sector plans, participants, and plan contributions and assets to examine why DB plans have steadily lost ground as the preferred plan type in recent decades. It explores several explanations for the increased use of DC plans and cites the research and lines of reasoning used to support them. These reasons include government regulation; changes in the work place; business environment and risk associated with funding and managing pension plans; firm size; increased global competition; and the successful marketing efforts of consultants and DC plan service providers. Developments in the public sector--on the federal and state and local levels--are discussed. The report addresses public policy implications raised by the movement away from DB toward DC (and hybrid) plan designs. Important issues in this context include possible sources of future retirement income; the impact of job stability on the portability of retirement benefits as well as benefit preservation and decumulation; and the extent to which alternative retirement plan designs satisfy the needs of both employer and employee. A closing section examines two topics of importance to retirement plans: changes in the tax code resulting from the Economic Growth and Tax Relief Reconciliation Act (EGTRRA) of 2001 and recent developments in corporate governance reform and financial disclosure. The report updates information contained in a 1997 EBRI analysis of the same subject, and includes sections on plan design and operational issues that are combined into an appendix to provide basic background on how retirement plans work.

Presenting the evolution of supplementary pensions over the past 25 years, this comprehensive book introduces the origin of pensions as a concept and explores the role that international organisations play within the field. It draws comparisons between different welfare states, reflecting upon current research and identifying new directions and ideas.

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Chile’s pension system came under close scrutiny in recent years. This paper takes stock of the adequacy of the system and highlights its challenges. Chile’s defined contribution system was quite influential when introduced, and was taken as an example by other countries. However, it is now delivering low replacement rates relative to OECD peers, as its parameters did not adapt over time to changing demographics and global returns, while informality persists in the labor market. In the absence of reforms, the system’s inability to deliver adequate outcomes for a large share of participants will continue to magnify, as demographic trends and low global interest rates will continue to reduce replacement rates. In addition, recent legislation allowing for pension savings withdrawals to counter the effects from the COVID-19 pandemic, is projected to further reduce replacement rates and increase fiscal costs. A substantial improvement in replacement rates is feasible, via a reform that raises contribution rates and the retirement age, coupled with policies that increases workers’ contribution density.

At the same time, public and private trust in traditional pension offerings is rapidly eroding, as companies alter, amend, and terminate their conventional plans in the face of poor investment performance and new methods of pension accounting. Experts from the UK, the US, Japan, Sweden, and Canada offer international perspectives on the evolving institutions of retirement practice. This book provides readers a range of insights and strategies not available in other volumes, and it represents an invaluable addition to the PRC/OUP series. It will be particularly valuable for managers working toward more efficient pension plans; to scholars and policymakers seeking to maximize pension design and effectiveness; and to actuaries and tax specialists concerned with pension regulation. The Pension Research Council at the Wharton School of the University of Pennsylvania was founded 50 years ago to encourage research and teaching on pensions and retirement security.