Social Security is a defined benefit (DB) pension plan. Proposals for "reforming" Social Security suggest replacing it with a defined contribution (DC) savings plan. This paper compares the financial and non-financial aspects of DB pensions and DC savings plans, and discusses how changing financial and labor markets affect the interpretation of these plans. Recent wage stagnation has strengthened the arguments for "reform," but a return to the more historical pattern of wage growth would undermine the arguments for reform.
Baker, D. (1997). Saving social security with stocks: The promises don't add up. New York: The Twentieth Century Fund.
2.
Gustman, A. L., & Steinmeier T. L. (1995). Pension incentive and job mobility. Kalamazoo, MI: W.E. Upjohn Institute for Employment Research.
3.
Kennickell, A. B., Starr-McCluer, M., & Sunden, A. E. (1997). Family finances in the U.S.: Recent evidence from the survey of consumer finances. Federal Reserve Bulletin, 83, 1-24.
4.
Orr, D. V. (1999). Why defined contribution savings plans are not real pensions. Under review by Journal of Economic Issues.
5.
Orr, D. V. (2000). The erosion of women's retirement security: Social security and private pension reform (Working Paper).
6.
Rejda, G. E. (1999). Social insurance and economic security. Upper Saddle River, NJ: Prentice-Hall.
7.
Schieber S. J., & Shoven, J. B. (1994). The consequences of population aging on private pension fund saving and asset markets (Working Paper No. 4665). Cambridge, MA: National Bureau of Economic Research.
8.
Social Security Administration Trustees. (2000). Annual report of the board of trustees, federal old-age and survivors insurance and disability trustfunds, 2000. Washington, DC: U.S. Government Printing Office.
9.
Weisbrot M. (1999). Unequal sacrifice: The impact of changes proposed by the advisory council on social security. Washington, DC: The Preamble Center for Public Policy.
