House Committee on Education and the Workforce, Subcommittee on Employer-Employee Relations

Defined Benefit Pension Plans

Chairman Johnson, Ranking Member Andrews and members of the Subcommittee, I appreciate the opportunity to appear before you to discuss defined benefit pension plans and their important role in our private pension system.

It is my understanding that the main purpose of today?s hearing is to provide the Members of the Subcommittee with background information, an overview, useful perspective and a deeper understanding of the defined benefit pension system, rather than focusing at this time on specific legislative measures. Accordingly, after providing brief background relating to the private pension system, my testimony will address the basic nature of defined benefit (DB) plans and the key differences between them and defined contribution (DC) plans, will discuss the decline in DB plan coverage and its causes, and will evaluate DB p lans, including their advantages and disadvantages, within the context of our private pension system as a whole, including a number of policy implications. My testimony today will not address specific legislative proposals.

Because I have been asked to address some of these issues in congressional testimony and correspondence with Congress in the past, certain portions of this testimony draw heavily on my previous writings (often quoting verbatim), as indicated specifically in the footnotes to this writte n testimony.