The Investment Company Institute pressed its case againstconventional wisdom Monday, releasing data showing thatemployer-sponsored retirement plans help more Americans today thanever before.

In 2013, it said, one-third of retirees received someretirement income from plan-sponsored assets, either their own or aspouse’s. In 1975, the rate was 21 percent, it said.


Moreover, median retiree income from private-sector plans wasabout $6,000 in 2013, compared to $4,900 in inflation-adjusted 1975dollars, it said.


Critics of the employer-sponsored defined contribution modelinclude politicians on both sides of the aisle and a number ofthink tanks. ICI’s research is meant to challenge the widelyheld presumption that Americans are less prepared for retirementsince the decline of defined benefit plans in favor of definedcontribution plans.


“To date, the shift from defined benefit pensions to definedcontribution pensions has not led to a decline in private-sectorincome,” said Peter Brady, senior economist at ICI. “Since 1991,there has been a more than 40 percent increase in the median amountof inflation-adjusted income received by those with income fromprivate-sector pensions.”

The ICI’s research is based on private-sector retirement incometrends since 1974, just after the enactment of the EmployeeRetirement Income Security Act, or ERISA.


The ICI, which represents the interests of the mutual fundindustry, also contends that proponents of defined benefit plansoften overstate their historical value by discounting how manyworkers actually failed to get the full benefits they werepromised. Vesting rules and “back-loaded benefit accruals” resultedin many retirees getting little or no retirement income from theirdefined benefit plans, it said.


In recent testimony to the Senate Finance Committee, Brian Reid, ICI’s chief economist,laid out the mutual fund industry’s vision for improving theexisting employer-sponsored model.

It said it supports legislative efforts to promote retirementsavings, put Social Security on a sound financial footing, fosterinnovation in the voluntary retirement savings system and helpsmaller employers by granting more access to multiple employerplans.


“What is central to these ideas is that they build upon — and donot undermine or replace — our current retirement system,” saidReid.

Earlier this month, the ICI released statistics that it said showedthat the percentage of workers with access to an employer-sponsoredretirement plan — believed to be 53 percent — distorts how manypeople actually have such access at various points in theircareers.

Among workers 30 or older with at least moderate levels of income,70 percent work for an employer that sponsors a plan, while 75percent have access to a plan through a spouse’s employer, itsaid.

Also read: More have access to retirement plans than thought

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Nick Thornton

Nick Thornton is a financial writer covering retirement and health care issues for BenefitsPRO and ALM Media. He greatly enjoys learning from the vast minds in the legal, academic, advisory and money management communities when covering the retirement space. He's also written on international marketing trends, financial institution risk management, defense and energy issues, the restaurant industry in New York City, surfing, cigars, rum, travel, and fishing. When not writing, he's pushing into some land or water.