Retirement and the Evolution of Pension Structure

Leora Friedberg, University of Virginia
anthony webb, Center for Retirement Research at Boston College

Abstract

Defined benefit pension plans have become considerably less common since the early 1980s, while defined contribution plans have spread. Previous research showed that defined benefit plans, with shart incentives encouraging retirement after a certain point, contributed to the striking decline in American retirement ages. In this paper we find that the absence of age-related incentives in defined contribution plans leads workers to retire almost two years later on average, compared with workers with defined benefit plans. Thus, the evolution of pension structure can help explain recent increases in the typical retirement age, after decades of decline.