Changing Demographics and New Pension Risks

Abstract

This study used longitudinal data from the Panel Study of Income Dynamics to examine the hazards of pension saving associated with variations in household arrangements among two cohorts of older workers. Results from multivariate models predicting pension participation, plan type, and pension cash-out highlight that under the defined-contribution plans characteristic of the new pension environment, women continue to bear greater risks associated with family position and lower workplace earnings. Unmarried women were the most likely to be without any type of pension. High rates of divorce among recent cohorts coincide with the spread of individualized pensions and raise additional concerns about women's pension-related income security. Women are vulnerable to income and savings losses in response to marital dissolution, and findings provide evidence that these women are at greater risk of benefit loss due to pension cash-out. The results suggest that these risks may be even greater for younger cohorts of workers.

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