The Need for Robust and Competitive Retirement Programs in the Post-Pension World

By Dr. Gary L. Deel, Ph.D., J.D.

The state of retirement plan programs for workers in America has changed drastically over the past few decades. In the 1980s, roughly 80 percent of American workers had access through their jobs to a defined benefit plan — a retirement program which stipulates a guaranteed payment in retirement to each qualifying employee. The most common type of defined benefit plan was a pension program. These programs generally called for either lump sum or periodic payments to employees after retirement, and employee eligibility was contingent upon factors such as age at retirement and length of service with the employer.

But the landscape for retirement programs has shifted dramatically since then. And today, only 14 percent of American workers are still eligible for any kind of defined benefit plan in their employment packages. This is a really signficant change because it comes as Americans are living far longer than they used to. In 1980, the average American life expectancy was roughly 74 years. Today, that number is closer to 79 or 80 years — an increase of roughly seven to eight percent in just four decades’ time. So retirement programs are more important than ever.