The Impact of the Growth of Defined Contribution Plans on Bequests

This paper explores the shift from defined benefit to defined contribution plans and considers how it might affect bequests and thereby consumption and saving. Our hypothesis is that both intended bequests and unintended bequests will increase as retirees receive more of their pension benefits as lump sums rather than as annuity payments. We also contend that workers recognize that they may not consume their lump-sum payments and react differently to accumulations in defined benefit and defined contribution plans during their lifetime.