Promises to Keep: Ensuring the Payment of Americans’ Pension Benefits in the Wake of the Great Recession

Source: Ken Dau-Schmidt, Washburn Law Journal, (Forthcoming), April 19, 2013

From the abstract:
In this essay, I examine the problem of designing a pension plan within the context of our larger public policy of encouraging workers to save for retirement. I discuss the various problems and risks inherent in encouraging workers to adequately save for retirement, invest those assets efficiently, and ensure the planned level of retirement consumption for the remainder of their lives. I also discuss the three major types of pension plans in the American retirement system, defined benefit, defined contribution, and hybrid, and assess how well each of these types of plans deals with the problems encountered in designing a pension plan. I then examine the particular problems that have arisen because of our relatively recent transition from defined benefit to defined contribution plans, and the funding problems caused by the Great Recession. I close with a section discussing policy changes that might be made to improve our pension system and help ensure that workers receive not only the pension benefits they were promised, but also adequate benefits to sustain them comfortably during their retirement.