Summary
Changing Roles of Defined Benefit and Defined Contribution Plans—Since the enactment of the Employee Retirement Income Security Act (ERISA) in 1974, employer-sponsored retirement plans have changed significantly. While the number of employer-sponsored pension plans and plan participants is increasing, proportionately fewer employers are offering traditional defined benefit plans and more are offering a diverse array of new defined benefit plans, defined contribution plans, and hybrids. The increasing prevalence of these plan types has implications for retirement income security in that it shifts the burden of planning for retirement from employers to individuals. Plan participants are increasingly being required to take responsibility for decisions regarding participation, how much current pay to defer, how the funds should be invested, and whether to save deferrals for retirement or spend them earlier. Observers disagree over the implications of these changes for the security of future retirees' income. The Bush administration favored a mix of individual effort and an employment-based system, increasing individual “empowerment” while encouraging increased saving for retirement. The Clinton administration may more strongly seek to expand the defined benefit system while encouraging the establishment of new defined contribution plans and preservation of lump-sum distributions until retirement.
Benefits Are a Substantial Component of Total Compensation—Employee compensation is one of the more significant employer costs, with benefits representing an increasing share of that cost. This article examines employer costs for total compensation and the portion of total compensation attributable to both benefits--specifically noncash benefits--and wages and salaries. Data are drawn from a survey conducted by the U.S. Department of Labor, Bureau of Labor Statistics (BLS), with adjustments made in order to examine noncash benefits.
Benefits Continue to Play Key Role in Americans' Job Choices: Health Insurance Still Rated Most Important Benefit, According to EBRI/Gallup Survey—Three quarters of Americans (75 percent) consider employee benefits such as health insurance, pensions, vacation, sick leave, child care, and life insurance “very important” when deciding whether to accept or reject a job offer, according to a recent survey by EBRI and The Gallup Organization, Inc. This is an increase from previous years in which similar EBRI/Gallup surveys found that 70 percent of Americans in 1991 and 57 percent in 1990 considered these employee benefits “very important” in making employment decisions.