Life After the Pensions Plan: A New Era of Retirement Uncertainty

As the 2020 presidential election nears, the debate around retirement security is intensifying. Access to pensions, which have been a staple of worker retirement plans for decades, is rapidly becoming a thing of the past. The Pension Benefit Guaranty Corporation, a federal agency, has estimated that, by 2027, the number of workers receiving a pension will be less than one percent of the workforce. And, according to a study by the Employee Benefit Research Institute, 82 percent of all workers will not have a guaranteed retirement savings plan by the time they retire. Why are pensions becoming increasingly rare? First, the stock market has been volatile and unpredictable over the past few years, significantly reducing the value of retiree portfolios. Then, there’s the fact that many employers are moving away from traditional defined benefit pensions toward 401(k) and other employee-sponsored savings plans. These hybrid plans are designed to provide employees with a retirement plan, but they also give employers more control over how the money is invested. Employers also are looking to save money by freezing or reducing pension benefits, and by reducing the number of years of service that employees are required to contribute to a plan. What does this mean for retirees?