They had suffered from the move away from final salary pension schemes to less generous money purchase plans
and when they come to claim the state pension it will make up a smaller proportion of their previous earnings.
The National Association of Pension Funds said default funds - also known as money purchase plans
- should shift members' money away from shares to safer investments as they approach retirement.
Munnell critically evaluates the implications of shifting from DB to 401(k) plans, as well the shift to money purchase plans
in the United Kingdom.
Of the companies surveyed, 87% of respondents reported the use of 401(k) plans, pension plans, stock purchase plans, stock option plans, and money purchase plans
in addition to the ESOP.
As a result, 401(k) plans have become more attractive options than SEP-IRAs, Simple IRAs or profit-sharing or money purchase plans
People with private pensions or company money purchase plans
must use their pension pot to buy an annuity, which guarantees them an income for life, before they are 75.
They are being replaced by money purchase plans
which rely on stocks and shares rising in price.
Such exclusions may significantly reduce the cost of employer contributions, particularly in money purchase plans
, defined benefit plans and top-heavy plans.
These seemingly divergent business imperatives have led to a dramatic increase in the incidence of 401(a) money purchase plans
, such as profit sharing plans funded primarily with employer contributions, according to Diversified Investment Advisors' recently released Report on Retirement Plans--2006.
The closure of most defined benefit schemes means that more and more of us now rely on money purchase plans
to fund our retirement.
The new share class generally supports Delaware's 401(k), ERISA 403(b), Governmental 457, Profit Sharing and Money Purchase plans
, as well as other non-qualified deferred compensation arrangements.
Examples include 401 (k) plans, profit-sharing plans and money purchase plans