NIRS Brief Cautions on Pension Shifts

May 22, 2008 ( - A new research paper highlights the societal risks attendant with a decline in pension coverage - and suggests areas for policymakers to consider in addressing that concern.

The Issue Brief, “Retirement Readiness: What Difference Does A Pension Make?” finds that the recent shift away from traditional pensions has coincided with a decline in retirement wealth for the typical household, reducing retirement readiness and increasing the risk of hardship in old age.   As a result, fewer working families will have a good chance of maintaining a middle-class living standard in retirement, according to the paper – the first retirement research Issue Brief for The National Institute on Retirement Security (see  Pension Research Group Taps Board, Leaders ).

“Just a decade ago, there wasn’t a need for an organization like NIRS,” said Beth Almeida, NIRS executive director.   “After a lifetime of work, most middle class Americans could expect to retire at a reasonable age with a modest income that would last until death.   But times have changed, and it is getting tougher to retire – and impossible for some,” Almeida added.

The premier Issue Brief examines a broad range of key retirement reports and data to conclude:   

  • The shift from traditional pensions to defined contribution plans in the private sector has reduced the amount of money set aside for retirement, leading to a reduction in retirement wealth for the typical worker.  
  • Large numbers of Americans will fall short in retirement, leaving older Americans with inadequate income to be self-sufficient or in poverty.  
  • Middle class workers with pensions are less likely to be at risk in retirement.  
  • Pensions tend to be better at ensuring employees are able to accumulate adequate resources for retirement.  
  • Key features distinctive to pensions seem to make a significant impact on retirement readiness.  

New Web Site

The group also launched a new web site, , that  offers access to an excerpt of retirement economics expert Teresa Ghilarducci’s new book, “When I’m Sixty-Four:    The Plot Against Pensions and the Plan to Save Them.”  Additionally, according to an announcement, the site encourages ordinary Americans to communicate their retirement challenges, which will help to shape NIRS’ research and education initiatives.

The Issue Brief suggests that policymakers focus on shoring up existing pension plans by revisiting the rules governing the funding of private sector pensions and examining existing defined benefit pensions that insulate employer contributions from shocks, reduce large swings in contributions, and secure employee benefits.   Over the long term, the paper's authors assert that it will be necessary for policymakers to identify channels to establish new plans and expand existing plans by pooling of funds across employers, industries and occupations, as well as exploring the role of the government in serving as an incubator for new, well-functioning, secure pensions.

The Web site also provides

  • A venue for Americans to submit information on their retirement challenges.
  • A Book Corner with reviews of notable books focused on retirement security.
  • A Report Fact Check, with analysis and review of various retirement research reports.
  • A Commentary section that provides a forum for NIRS staff and guests to post short blogs and longer columns on key issues.  
  • A sign up function so that interested parties can receive regular updates.

NIRS will distribute a regular stream of reports and data, while continually adding resources, educational materials, and functionality to the web site.  

The National Institute on Retirement Security is a not-for-profit organization established to contribute to informed policymaking by fostering a deep understanding of the value of retirement security to employees, employers, and the economy through national research and education programs.