In the article, “All Shook Up,” VanDerhei shares that only a small percentage of workers enjoyed the “good-old days” of defined benefit (DB) pension plans, and that, going forward, he anticipates defined contribution (DC) plans likely will replace a higher percentage of final pay for more people than DB plans have to date.
VanDerhei notes a significant decline in workers’ confidence in their ability to retire successfully since the recent market crisis. While many younger workers regained lost ground in their account values, some longer-tenured employees have yet to recover their losses. VanDerhei believes many of these longer-tenured workers are permanently shaken. In this environment, VanDerhei underscores the need to increase contribution rates in DC plans, encouraging auto enrollment and more rapid contribution escalation – measures that can help workers achieve their retirement goals.
