Changing pensions in cross-section and panel data

This study analyzes changes in the value of defined benefit (DB) pension plans over time. It uses summary plan descriptions provided by the employers of respondents to the Survey of Consumer Finances (SCF) in 1983 and in 1989, applying them to similar earnings histories. Pension changes between 1990 and 1995 are also analyzed, using employer plan descriptions for large firms published by the Watson Wyatt Company. Substantial changes are found in pension values and pension accruals between the two SCF cross-sections. For example, the median value of DB plans at age 55 is 40 percent higher in 1989 than in 1983. Also, early retirement age falls over the time period. Because there are important changes in the composition of the pensions in each cross-section, those who are covered by the same plan in both years experience smaller changes than are suggested by comparing cross-section data from two different time periods. Nevertheless, those who are continuously covered by the same pension also experience important pension changes over the period. For example, a fifth of those continuously covered by a defined benefit plan experiences a substantial change in early retirement date and ear