Proponents of DC plans make some valid points regarding the advantages of these programs. The portability of benefits, individual control over investments and the ability to attract quality employees are all important issues that cannot be addressed through a defined benefit plan alone. We would argue that a DC plan actually increases investment risk. In a DB plan the employer is able to take the long view regarding investments and is almost always able to average good periods with bad. The shifting of mortality risk seems never to be addressed, but that makes it no less real.
People seem to have a tendency to underestimate their remaining lifetime.
Many individuals are more conservative when they have control over their retirement investments, resulting in lower rates of return than can be achieved by the professional money managers used by a DB plan. While the lump sum distribution feature of DC plans makes them more portable than DB plans, it is only of value in preserving retirement benefits if it is utilized. We would argue that there is a need for both DB and DC plan coverage for a given workforce. If this were to occur, it would make the most sense for both plans to be administered and controlled by a single entity. In that way both plans can work in harmony rather than as opposing forces.