John M. Vine
WP2014-14
Abstract — Federal law both cultivates and regulates employer-sponsored pension plans in the United States. Some believe that because employers have been migrating away from traditional defined benefit pension plans in the United States, the plan cultivation provisions of federal law have failed to encourage U.S. employers to offer pension benefits to their employees. However, Congress has allowed each employer to decide for itself whether to provide pension benefits to its employees and, if so, what kind of pension benefits to provide. Employers appear to have migrated away from traditional defined benefit plans primarily because employers have concluded that defined contribution plans and some hybrid plans are more compatible with their own interests and the interests of their employees than are traditional defined benefit plans.