This paper, which examines the impact of the trend in the US of corporate funds freezing their defined benefit funds and offering defined contribution plans, shows that net of the increase in total DC contributions, firms save 2.7-3.6 per cent of payroll per year, and over a 10-year horizon they save 3.1 per cent of total firm assets.
However the authors conclude that the workers would have to value the structure, choice, flexibility, or portability of DC plans by at least this much more to experience welfare gains from freezes.
To access this article, authored by Joshua Rauh from Stanford University, Irina Stefanescu from the Board of Governors of the Federal Reserve System, and Stephen Zeldes from Columbia University, click below.
Cost shifting and the freezing of corporate pension plans
