Abstract
The Survey of Consumer Finances (SCF) measures respondents’ self-reported expected benefits from defined benefit (DB) pension plans. As a percentage of final pay, the mean annual benefit accrual rates in 2004 and 2007 are estimated to have been 2.06 percent and 2.48 percent, respectively. These rates are higher than the average annual accrual rate of 1.59 percent reported by the U.S. Department of Labor’s 2005 National Compensation Survey (NCS), which is based on official plan documents. This suggests that the 2004 and 2007 SCF respondents overestimated their expected pension benefits at retirement, unless they had more generous accrual formulas than plan participants in the 2005 NCS. Despite the likely measurement error in self-reported expected benefits, young DB plan participants reported having less generous benefit formulas than older participants, the SCF finds. Respondents to the 2007 SCF who expected to work 25 or more years before retirement estimate their mean annual benefit accrual rate to be 1.68 percent, compared with 2.60 percent for those who expected to work less than five years before retirement.