A broad consensus exists that workplace pension arrangements around the world are sick and in need of strong medicine. Rather than resurrect the traditional defined-benefit (DB) plan or broaden defined-contribution (DC) plan coverage, this article argues that we move from an “either/or” to an “and/and” mindset to improve global workplace pension coverage, adequacy, and certainty. Pension arrangements can combine the best of DB and DC plans and minimize the impact of their less-attractive features. However, we must also redesign the institutions through which workplace pensions are delivered. The ideal pension-delivery institution is expert, has scale, and acts solely in the best interests of plan participants.
Editor’s Note: This article is adapted from the introductory chapter to the author’s book Pension Revolution(John Wiley & Sons), which is scheduled for release in January 2007.
Reprinted from Financial Analysts Journal, vol. 63, no. 1 (January/February 2007): 21–25. Author affiliation is accurate as of the original publication date.