The shift from defined benefit to defined contribution retirement plans

Deferred Wages Falling

The policy and practice of deferred wages in the form of retirement plans including 401(k), 403(b) and so forth have shifted a lot since 1990. In the prior decades, it was a common trend to have a defined benefit plan where all the risks of the money not being there were borne by the employer and the benefit was ostensibly borne by the employer. Since 1990, there has been a noticeable shift from defined benefit to defined contribution where employees must contribute more (if not a lot more) to their own plans and the benefits and money pot present at the end of a work career is by no means guaranteed or assured. It will probably be there but possibly not (Sloane & Witney, 2010).

As for my opinion surrounding all of this, it is clear that firms have said "enough" to paying more and more money to employees who have retired and are not contributing to the firm anymore while the benefits are still flowing. As made clear by the recent downfalls (but they have all since recovered, for the most part) of the automakers, paying people inordinate amounts of money for life with little to no contribution monetarily from the employees is over (Reid, 2012).