The decline of defined benefit pension plans in developed countries

Abstract

Defined benefit pension plans have played an important role in pension sectors of developed countries in North America, Great Britain and Western Europe for several decades. However, with the beginning of the 21st century, altered demographic trends and global financial market fluctuations have significantly disrupted the financial position of defined benefit pension plans. The aim of this paper is to examine the long-term movement of indicators of the importance of defined benefit pension plans in the pension systems of four developed countries: the United States, Canada, the Netherlands and Great Britain. In these countries defined benefit pension plans still have an important role. The analysis shows that the number of occupational defined benefit pension plans in private sector in the observed countries is declining, along with the continuously decreasing number of participants and increasing problems in achieving a sustainable financial position in the long run.