Michael Barone‘s latest Washington Examiner article explores the future of the “defined benefit” retirement system in the United States:
The defined benefit is dying. Barack Obama is struggling to keep it alive, but it’s apparent that it’s something that even as bounteously rich a society as ours can’t afford.
Yes, I know that “defined benefit” is not a common household phrase. But most people know what a defined-benefit pension is: It’s when your employer promises to pay you a certain amount of money, pegged to your salary or according to some other formula, when you retire.
Some 30 years ago, most big employers had defined benefit pension plans. Some private-sector employees still have them, and many government employees do. …
… Many on the political left decry the disappearance of defined-benefit pension plans from the private sector and strive mightily to maintain them for public-sector employees. They argue that people with defined-contribution plans often don’t save enough for a comfortable retirement or make bad investment choices.
They argue that defined-benefit plans and defined-benefit public policies provide you with absolute 100 percent security and eliminate all risk. Unfortunately it’s becoming clear they don’t.
