Working Paper: NBER ID: w12834
Authors: James Poterba; Steven Venti; David A. Wise
Abstract: Demographic change can have an important effect on the stock of assets held in defined benefit pension plans. This paper projects the impact of changes in the age structure of the U.S. population between 2005 and 2040 on the stock of assets held by these plans. It projects the contributions to and withdrawals from these plans. These projections are combined with estimates of the future evolution of assets in 401(k)-like plans to describe the prospective impact of demographic change on the stock of assets in retirement plans. Information on demography-linked changes in asset demand is a critical input to evaluating the potential impact of population aging on asset returns.
Keywords: Defined Benefit Plans; Asset Flows; Demographic Change; Retirement Savings
JEL Codes: G23; J11; J14; J32
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Decline in participation rates in DB plans (J26) | Reduced demand for DB assets (G19) |
| Aging population (J11) | Increased withdrawals from DB plans (J26) |
| Increased withdrawals from DB plans (J26) | Downward pressure on asset prices (G19) |
| Aging population (J11) | Lower returns in financial markets (G19) |
| Aging population (J11) | Decline in participation rates in DB plans (J26) |