July 26, 2012 (PLANSPONSOR.com) - Income from defined
benefit (DB) pension plans significantly contributes to the well-being of older
According to a report from the National Institute on Retirement
Security (NIRS), rates of poverty among older households (ages 60-plus) lacking
defined benefit (DB) pension income were approximately nine times greater than
the rates among older households with DB pension income in 2010, six times greater than in 2006.
Older households with lifetime pension income are far less likely
to experience food, shelter and health care hardship, and are less reliant on
public assistance, according to the report titled “The Pension Factor 2012:
Assessing the Role of Defined Benefit Plans in Reducing Elder Economic
Hardships.” The data also indicated that pensions are a factor in preventing
middle-class Americans from slipping into poverty during retirement.
“[Pension income keeps] middle-class
families in the middle class when they retire,” said Diane Oakley, executive
director at NIRS and co-author of the report, during a webinar about the data.
In addition, older households with DB income generally fared
better during the recent economic turmoil than households without it. “The
power of the DB plan actually became even stronger in the financial crisis,”
The report estimates that in 2010, DB pension receipt among older
American households was associated with:
million fewer poor and near-poor households;
fewer households that experienced a food insecurity hardship;
fewer households that experienced a shelter hardship;
fewer households that experienced a health care hardship; and
million fewer households receiving means-tested public assistance.