DB Income Reduces Poverty Risk in Older Americans

July 26, 2012 ( - Income from defined benefit (DB) pension plans significantly contributes to the well-being of older Americans.

By Corie Russell | July 26, 2012
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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,” Oakley said.

The report estimates that in 2010, DB pension receipt among older American households was associated with:

  •  4.7 million fewer poor and near-poor households;
  •  460,000 fewer households that experienced a food insecurity hardship;
  •  500,000 fewer households that experienced a shelter hardship;
  •  510,000 fewer households that experienced a health care hardship; and
  •  1.22 million fewer households receiving means-tested public assistance.