The country-wide shift from defined benefit plans to definedcontribution plans is not resulting in less accumulation of retirement assets,according to a new paper from the Center for Retirement Research atBoston College.

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That conclusion directly contradicts the retirement think tank’slong-standing thesis—that the nation has become less prepared forretirement as more workers have been moved into 401(k) plans.

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The Center and its director, AliciaMunnell, have been producing data for years showing that the shiftto 401(k) plans was resulting in less retirement savings. Munnell was the lead authorof the most recent report.

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The new paper looks at data on defined benefitaccrual rates from the National Income and Product Accounts between1984 and 2012 and compares those rates with defined contributionassets over the same period.

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Munnell and her team of researchers conclude that the percentageof deferrals of total salaries has slightly declined over time asmore sponsors shifted to defined contribution plans.

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But that simple comparison doesn’t provide a full picture. Theresearchers then set out to assess returns on those deferrals.

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Because more 401(k) and defined contribution assets wereinvested in equities throughout the period, the total annual changein pension wealth has been relatively steady, meaning the shift toDC plans has not led to less total saving.

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“We are going to have to change our story,” write Munnell andthe two other researchers.

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In 2012, total savings to retirement plans—from both DC and DBforms—was about 14 percent of wages after accounting for investmentgains in both types of plans, down from its peak in 2008 and upslightly from 1984.

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Defined contribution assets accounted for about 10 percent ofthat, after factoring for investment gains, while defined benefitplans accounted for about 4 percent.

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The average annual DC plan contribution rate was about 4 percentin 2012, about twice as much as it was in 1984. That figure doesnot account for investment gains that the researchers say must befactored when comparing defined contribution and defined benefitmodels.

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“Contributions do not tell the whole story,” write theresearchers. “Pension wealth also goes up by the return onaccumulations.”

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The researchers applied an annual rate of return of 5.5 percentto accruals in both types of plans and factored accrued liabilitiessponsors carry in defined benefit plans.

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When accounting for those returns, the overall accrual rate hasremained steady since 1984.

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“This pattern reflects the large defined contributionaccumulations as a result of the prolonged bull stock market duringthe 1990s and the strong rebound since the financial crisis,” thereport concludes.

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It also proves that 401(k) investors take more risks withcontributions than have defined benefit participants. “The highreturns associated with risky investments have produced substantialasset accumulation,” said Munnell and her team.

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The report notes that the shift to defined contribution planshas meant sponsors have moved investment and mortality risk toindividuals.

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Those consequences can only be measured on an individual basis,claims the report.

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Nonetheless, the report’s primary conclusion—that theaccumulation of retirement assets has not declined as a result ofthe shift from defined benefit to defined contribution plans—willno doubt be welcomed by 401(k)-style savings advocates.

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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.