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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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What Is the Future of the Defined Contribution Paradigm?

What Is the Future of the Defined Contribution Paradigm?

(p.137) CHAPTER SIX What Is the Future of the Defined Contribution Paradigm?
The Origins of the Ownership Society

Edward A. Zelinsky

Oxford University Press

In the private sector, the expansion of the individual account paradigm will continue in the years ahead without significant controversy or impediment. In contrast, there will be increasing contention about public employees' defined benefit coverage as governmental decision-makers emulate their private sector counterparts by embracing individual account plans to shift investment, funding, and longevity risks to public employees. Equally disputatious will be the debate about efforts to expand the use of HSAs, a debate which addresses the fundamental implications of the defined contribution paradigm: the merits of individual ownership and control, the benefits of risk-pooling, the costs of adverse selection, and the distributional consequences of individual accounts. There will be no resurrection of traditional defined benefit pension plans. Even if the advocates of such plans succeed in pruning the regulatory burdens on traditional pension plans, there will be no wholesale return to the classic defined benefit paradigm.

Keywords:   individual accounts, public employees' pensions, investment risk, funding risk, longevity risk, HSA, defined benefit pension, adverse selection, risk pooling

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