How long can we keep government employees on defined-benefit pension plans while the rest of us scramble to fund our 401(k)s?
With defined-benefit pension plans falling by the wayside, a growing number of buyers are turning to longevity policies to serve as pension substitutes.
It seems clear, though, that Americans have won more responsibility for their retirement portfolios as firms switch from defined-benefit pension plans to defined-contribution plans.
But the regulation also offers us an opportunity to discuss a broader issue: why do charter schools even want to participate in defined-benefit pension plans?
"These plans are concerned about their ability to invest with your firm going forward, " Ms. Weingarten wrote, given Mr. Loeb's support for StudentsFirst and its "outspoken attacks" on defined-benefit pension plans.
If prior contributions to defined-benefit pension plans earn a lower investment return than the state and federal regulators governing these plans had assumed they would, taxpayers must make up the difference.
FORBES: In the Age of Austerity, Public School Financial Reform Is Very Necessary
With markets volatile and corporations scaling back defined-benefit pension plans, those in or near retirement are paying high fees to transform plain old variable annuities into a source of guaranteed income for life.
Another beneficial effect is that American employers with defined-benefit pension plans for employees have been able to reduce their contributions into pension funds as the rise in share prices has swollen the value of funds' assets.
That was the same argument the financial industry used to kill off the defined-benefit pension plans our grandparents relied on in order to sell a new generation of savers on the idea that 401-Ks had the potential for higher returns.
FORBES: Retirement Disaster Looms For Universal Life Policyholders
Earlier this month, President George W. Bush signed a rewrite of the nation's pension laws that will likely hasten the disappearance of traditional defined-benefit pension plans--the kind that are funded entirely by the company and promise retirees a fixed stipend each month for life.
Obama administration officials have been wrestling with the challenge of funding retirement across lengthening lifetimes and amid dwindling traditional "defined-benefit" pension plans.
But ever since disgruntled IBM employees brought the issue to public attention, the movement by major corporations to convert traditional defined-benefit plans to so-called cash-balance pension plans has been a lightning rod for workers'--and particularly baby boomers'--growing anxiety over their retirement incomes.
Companies have also, sensibly, been switching from defined-benefit schemes, under which the company bears the risk of maintaining pension payments, to defined-contribution plans, in which the risk lies with individual pensioners.
That's too bad because sooner or later the defined-benefit plans are going to run out of money and benefits will be cut especially if pension trustees let Randi Weingarten serve as chief investment officer.
应用推荐