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The Origins of the Ownership SocietyHow the Defined Contribution Paradigm Changed America$
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Edward A. Zelinsky

Print publication date: 2008

Print ISBN-13: 9780195339352

Published to Oxford Scholarship Online: January 2009

DOI: 10.1093/acprof:oso/9780195339352.001.0001

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How Did It Happen?

How Did It Happen?

(p.31) CHAPTER THREE How Did It Happen?
The Origins of the Ownership Society

Edward A. Zelinsky

Oxford University Press

How did the defined benefit plan go from the behemoth of the private retirement system to a secondary player in that system? The story starts with the economic and demographic forces which in the 1960s and 1970s eroded these once-dominant pension plans and thereby set the stage for the emergence of the defined contribution paradigm. Among the forces depressing the defined benefit system have been diminishing union membership and the decline of traditional manufacturing, extractive, and transportation firms as well as an aging population; the changing, less physically taxing nature of work; the acceptance of increased employee mobility; and the desire of employers to shift to their employees the risks associated with providing retirement income. The regulatory choices embodied in ERISA then started the trend in America towards the defined contribution society as we know it today.

Keywords:   ERISA, union membership, defined contribution, individual accounts, employee mobility, 401(k), educational savings accounts, Roth IRA, Section 529 college savings plans, Section 457 plans

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