Changes in firm pension policy

Abstract

In light of the recent concerns regarding the solvency of Social Security's Old-Age, Survivors, and Disability Insurance (OASDI), private pensions may play an increasingly important role in the retirement welfare of U.S. retirees. However, the private pension landscape is also evolving in ways that may result in lower private pension wealth for retirees. One recent such phenomenon involves the conversion of traditional defined benefit (DB) pension plans to cash balance plans, resulting in lower pension benefits for workers. In this study, I investigate how characteristics of the firm's workforce influence whether the firm converted its traditional pension plan to a cash balance plan and how these characteristics related to the firm's pension plan policy more generally...