Today, company and employee contributions to retirement plans, as well as investment earnings, aren't taxed until the money is withdrawn. That exemption costs the federal government more in potential revenue than any other tax break, including the home mortgage deduction, according Congress's Joint Committee on Taxation. For years, experts have debated whether the plans disproportionately benefit the upper income. The study was based on 1990 Census data. But a study by Watson Wyatt Worldwide, a benefits consulting firm, based on 1990 income-tax data concluded that pension income is distributed much more evenly.
Opinions are just as conflicting on whether the gap is growing or closing.
That's important, considering workers change jobs about every five years. Pension benefits, by contrast, are based on years of service and often don't amount to much unless employees spend the last 20 years of their career with the same company. With a traditional pension, all employees have to do is stay at the company long enough to collect - typically five to seven years. Like Social Security, most pensions guarantee a monthly retirement check for as long as the person lives. Ghilarducci says that's because many employees can't afford to save and others never get around to it.