Defined Benefit and Defined Contribution Pensions

Retirement emerged as a well-defined and nearly universal stage of life in modern industrial societies around the turn of the 20th century. The proximate causes for the emergence of retirement were the shift to wage employment as the basic means of securing a livelihood and the associated dramatic rise in productivity and incomes. Securing a livelihood in industrial societies generally required an employer’s willingness to provide employment, a willingness that rapidly declined as workers aged past what came to be known as normal retirement ages, typically around age 65. The rise in productivity, however, created the wherewithal needed to provide incomes to those who retired from work. Government social security programs and employer retirement plans provide the great majority of workers the bulk of their ...