Private Pensions: Alternative Approaches Could Address Retirement Risks Faced by Workers but Pose Trade-offs

Source: United States Government Accountability Office, GAO-09-642, July 24, 2009

U.S. workers face a number of risks in both accumulating and preserving pension benefits. Specifically, workers may not accumulate sufficient retirement income because they are not covered by a defined benefit (DB) or defined contribution (DC) pension plan. For example, according to national survey data, about half of the workforce was not covered by a pension plan in 2008. Furthermore, workers covered by DC plans, in particular, risk making inadequate contributions or earning poor investment returns, while workers with traditional DB plans risk future benefit losses due to a lack of portability if they change jobs. Preretirement benefit withdrawals (leakage), high fees, and the inappropriate drawdown of benefits in retirement also introduce risks related to preserving benefits, especially for workers with DC plans.
See also:
Guaranteed Retirement Accounts: Toward Retirement Income Security
Source: Teresa Ghilarducci, Economic Policy Institute, 2007

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