• Applicable


Many American companies have eliminated, or are now eliminating, their defined benefit (DB) pension plans. They are substituting defined contribution (DC) plans, under which employees are primarily responsible for their own retirement savings. Since this is the new lay of the land, you need to know how to assess your DC plan. Focusing on the primary traits of one type of DC plan – U.S. 401(k) pension savings accounts – experts Don Ezra, Bob Collie and Matthew X. Smith explain the latest version-two (or “DC 2.0”) plans. getAbstract recommends this book to human resources (HR) and benefits professionals, retirement plan sponsors and consultants, financial planners, policy makers and all those who hope to retire one day with money from a defined contribution plan. While the book concentrates primarily on U.S. retirement plans, HR professionals from other nations still will find useful retirement planning information here.


The Evolution of Retirement

People did not always expect to retire and spend their senior years at leisure. Indeed, it was not until 1889 that German Chancellor Otto von Bismarck introduced a retirement program for his nation’s workers. One of the first such plans in history, it promised German laborers an income for life if they retired at 70. This didn’t help most Germans, since at the time the majority lived only to age 45. Today, however, many middle-class people in developed nations assume they will enjoy retirement without having to continue to work for enough money to cover their costs. Since people are living longer than ever, this scenario is becoming an increasingly expensive goal.

American retirement schemes used to be based primarily on defined benefit (DB) plans, where employers promised specific benefits and pooled pension funds for future individual payment as people retired. Now companies are replacing (or have replaced) DB plans with defined contribution (DC) plans, where firms track each worker’s money separately and make preset deposits, usually a percent of the employee’s salary that the worker matches or exceeds. DC plans cost employers less than...

About the Authors

Award-winning author Don Ezra is an investment strategy director for Russell Investments, where Bob Collie is an expert on U.S. and U.K. pension plans. Matthew X. Smith has written about and helped design, implement and administer contribution plans for more than 25 years.

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