NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Trends in Pension Benefit Formulas and Retirement Provisions

Olivia S. Mitchell

NBER Working Paper No. 3744
Issued in June 1991
NBER Program(s):   LS   AG

Changes in pension plan retirement formulas and benefit provisions over the last decade are examined, drawing on data collected and tabulated by the U.S. Department of Labor's Employee Benefits Survey of medium and large firms. The evidence shows that pension provisions have changed a great deal over the last decade, among both defined benefit and defined contribution plans. In the defined benefit environment, participation and vesting rules changed substantially; early retirement became more accessible and benefits somewhat more generous; normal retirement ages declined; and pension benefits were increasingly likely to depend on final rather than career earnings. Benefit integration with social security also grew to almost two-thirds of all participants in defined benefit plans. Overall, though pension replacement rates rose slightly over time, benefit ceilings remained pervasive for work at older ages and disability benefit provisions became more stringent. Defined contribution pension plans also changed a great deal over the decade of the 1980s. Workers were increasingly likely to be covered by combinations of defined benefit and defined contribution plans, with the latter usually a savings and thrift plan permitting a lump sum distribution. Profit sharing and stock plans appear to have stagnated during the latter part of the 1980s.

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Document Object Identifier (DOI): 10.3386/w3744

Published: Mitchell, Olivia S. "Trends in Pension Benefit Formulas and Retirement Provisions." In Trends in Pensions 1992, edited by J. Turner and D. Beller. U.S. Dept. of Labor, 1992

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