Big Changes Since 1960

The passage and signing into law of the Pension Protection Act of 2006, which is aimed at pushing companies to shore up their pension plans and ensure workers get their promised retirement benefits–a move that many have hailed as the most comprehensive reform of the American pension system in decades–has once again underscored the continued decline in traditional pensions and the rise in defined-contribution plans as the way of the future.

The new law comes just weeks after a joint conference held by the Employee Benefit Research Institute (EBRI) and the American Association of Retired Persons (AARP), which concluded that the ultimate demise of private-sector defined benefit pensions is now a foregone conclusion.

"In 1960, the traditional defined pension plans covered 23 million individuals, about half of all the private sector workers in the United States," the EBRI said in a statement. "But in the final years of the 20th century, the trend reversed and by 2006, the decline was dramatic, with employers either freezing or dropping their traditional defined plans."