0 used to describe a pension arrangement in which the amount paid into the pension plan is fixed but the value of the pension that is received may change, according to how the money in the plan was invested:
A further main contention is the risk attached to a defined-contribution versus a defined-benefit scheme.
The last two also top up the defined-contribution pension with a public, earnings-related pension payment.
Low levels of voluntary annuitization are becoming more evident as countries add defined-contribution components to existing retirement savings schemes.
In consequence, economic growth might be increased, for example due to more efficient allocation of labour to its most remunerative uses after pension reform to funded defined-contribution plans.
If at some point in time the government bonds become tradable, then this policy can also facilitate the transition to a defined-contribution fully funded pension system.
I would not be at all surprised if most final-salary company pension schemes moved, for new employees, towards being money-purchase or defined-contribution schemes.
However good, that replacement defined-contribution scheme must at least increase the element of risk to the individual pension investor.
Then, perhaps, we should look at what is happening to defined-contribution or money purchase schemes themselves.
