Historical Look at Pension Coverage

Cherry Blossoms in Washington, DC

1979 was a pretty good year if you were a Pittsburgh sports fan. The Steelers won the Super Bowl in January and the Pirates won the World Series in October. Willie Stargell was the MVP of the World Series, with the song "We Are Family" playing everywhere. 1979 also is a good starting point for looking at how the retirement space has changed over time. If you worked in the private sector that year, chances are more likely than not that you had a defined benefit (DB) plan rather than a defined contribution (DC) plan.


The Employee Benefit Research Institute (EBRI) has published data outlining just how much pension coverage has become DC-centric over 3+ decades. Interestingly, in both 1979 and 2011, an estimated 45% of all private-sector workers were covered by either a DB or DC plan. Over the years, the figure has remained relatively steady in the 45%-50% range. What is different is that of those who are covered by a retirement plan, there has been an almost complete transformation from DB to DC. For those participating in a retirement plan in 1979, 62% were in a DB plan, 16% in a DC plan, and 22% in both. By contrast, in 2011, 7% were in a DB plan, 69% in a DC plan, and 24% in both.


These days, many DC plans have added automated features to help participants save better. Some have suggested that this makes the DC plans more DB-like. With the well-documented struggles of participants to save, it will be interesting in the future to see if there is a move toward the center in terms of DB and DC coverage.

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