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Pension wealth plays a critical role in older individuals' retirement behavior and financial security. Accordingly, the magnitude and distribution of pension wealth is important in the ongoing debate about whether Baby Boomers have adequate retirement savings. This chapter summarizes the results of a long-term effort to develop an improved calculator to measure defined contribution pension wealth of older Americans, implemented using the Health and Retirement Study. Results show that pension wealth resulting from voluntary saving (and accrued earnings thereon) comprises half of DC pension wealth calculated for HRS respondents with matched summary plan descriptions. These are lower mean estimates of DC pension wealth than previously found, mainly resulting from changes for the wealthiest tail of the pension-wealth distribution. The findings imply that researchers must think more carefully about the economic assumptions underlying pension measures.

Prior studies have had difficulty assessing the value of expected pension resources, partly because many workers cannot recollect and report their pension entitlements, and partly because dual-earner couples may be individually (and sometimes jointly) entitled to claims on company pensions. This chapter develops and applies a new way to value pension wealth so as to determine the importance of pension benefits in retiree wellbeing. Pension values are estimated for workers nearing retirement using Health and Retirement Study data. Results indicate a drop in the number of workers with defined benefit plans near retirement, though their average pension values rose. Turning to defined contribution plans, coverage and the average real value of the pensions rose, producing an overall increase in average pension wealth over the period examined. There is no support for the view that pensions are becoming less important for near-retirees.

This chapter analyzes the impact of future freezes among corporate defined benefit (DB) pension plans. The authors simulate the impact on expected future pension wealth by assuming all existing private DB plans immediately freeze accruals for new employees. While this indicates the potential reduction in retirement wealth attributable to such plans, it does not recognize that sponsors freezing accruals may increase employer contributions to existing defined contribution (DC) plans or establish new DC plans. Using an empirical distribution of enhanced contributions to DC plans from sponsors freezing their DB plans, they evaluate the nominal annuity that could be purchased at retirement age from these enhanced contributions and back out the net pension loss experienced by employees in the future.

This chapter uses a range of sources of data, such as the Family Resources Survey, HMRC (formerly Inland Revenue) data and the new large-scale Wealth and Assets Survey, to document the distribution of assets and income among different groups. It highlights the fact that the distribution of assets is twice as unequal as the distribution of income. The chapter then looks at particular types of assets, such as: property; financial savings; and pension wealth. Data on receipts of inheritance as a source of asset accumulation are also presented and discussed. The analysis considers the distribution of assets and income by different groups in the population, for example by gender, age, social class and ethnic group. The chapter discusses the ‘lifecycle model’ of income and assets, and provides data on the role of inheritance in relation to inter-generational wealth inequality.

Defined contributions pension schemes tends to replicate inequalities observed in the labor market. As final pensions depend primarily on the total accumulated pension wealth during the working lifetime, individuals with poorer earning and lower labor market attachment will finish with low pensions. Moreover, if a sizeable fraction of the population participates into the informal labor market, inequality in pensions can be even higher, if contributions to formal schemes have tax advantages. During 2008, a major pension reform was implemented in Chile to reduce pensions inequalities and to prevent old-age poverty, guaranteeing a minimum and stable level of consumption upon retirement. At the same time the reform attempted to reduce incentives to participate into the informal sector. The first tier of the system was modified introducing a non-contributory flat minimum pension and a decreasing pension subsidy. Several other elements were implemented such as a child pension subsidy, compensation upon divorce, gender dependent disability insurance premium and male survivor pensions, recognizing structural inequalities of the system. This chapter computes the distributional effects on the final total accumulated pension wealth and pensions due to the reform. The reform has increased not only the self-financed pension wealth, due to the different mechanisms or subsidies received during the accumulation period, but also has importantly improved the final pension due to the first tier reform. For those workers retiring before 2015, the self-financed pension wealth and the final pension will increase in average 0.6% and 15%, respectively. Even though the final pension changes have been positive for both genders, the female pension improvement has been 56% higher than the rise for men, reducing the gender inequalities significantly.

This chapter addresses several questions surrounding employee stock ownership as a wealth-sharing tool. It discusses how much on average do employee owners own in “shared capitalist” firms (those with broad-based employee ownership, profit sharing, gain sharing, and/ or stock options). It explores how company stock distributed among employee-owners, which ownership structures distribute wealth most equitably, and how the distribution of employee stock ownership wealth compares to the distribution of wealth among US households. Further, the extent of employer stock substitute for other forms of compensation (higher pay and benefits) and for other forms of wealth is discussed. It also describes the effect of universal employee ownership of employer stock on the overall distribution of stock ownership and pension wealth in the United States. Results indicated that broad-based employee ownership may be raising wealth for many workers without unduly increasing worker risk.

The widespread use of various early retirement programs makes Belgium the country with the lowest average retirement age in the Western world, which is approximately fifty-seven years old for men. This chapter, which studies the incentives pushing people toward retiring early, explicitly models the incentive structure built into the various public retirement and early retirement systems. First, it computes indicators of benefit entitlement, such as social security wealth, and then defines several different incentive measures based on the notion of social security wealth. In a third step, the empirical estimation of microeconometric probit and option value models is performed. From an exceptionally rich and broad database, an accurate measure of all individuals' pension wealth was determined, as well as of the implicit tax rates the elderly workers face in case of delayed retirement.