Typically staff have been forced to contribute to less generous career-average or defined-contribution schemes.
Using a defined-contribution plan, such as 401(k), is one way to achieve smooth benefit accrual.
But in a defined-contribution scheme another year of work probably means a better pension.
Public-sector pensions for new employees must become defined-contribution plans, as in the private sector.
Defined-benefit pension funds are anyway being consigned to the dustbin, in favour of defined-contribution schemes.
We live in an age dominated by defined-contribution retirement plans, where workers make their own investment choices.
They are replacing them with defined-contribution plans, savings schemes into which employees and employers put regular contributions.
In the 1980s, however, companies moved away from guaranteed pensions, instead offering so-called 401(k) plans, or defined-contribution plans.
ECONOMIST: Enron's demise unmasks conflicts in company pension plans
Currently, 55% of plan sponsors enroll workers automatically in their employer-provided defined-contribution plan, up from 24% in 2006.
Many open people spend their careers without thinking much about what they're accumulating in their pensions and defined-contribution savings plans.
In the long run, defined-contribution plans that most corporations have embraced will also be adopted by local and state governments.
Most proposals for creating a defined-contribution alternative to a state pension plan or Social Security use an IRA or 401(k) model.
FORBES: How Three Texas Counties Created Personal Social Security Accounts and Prospered
Meanwhile, many employees in the private sector have been switched into defined-contribution schemes, where their retirement income is dependent on investment performance.
Indeed, Sandy Springs has no long-term liabilities at all, since the whole point of a 401(k) defined-contribution scheme is to avoid them.
Instead, new employees join defined-contribution schemes, which are much less generously funded.
But most importantly, governments must move away from the defined-benefit model and shift employees to defined-contribution retirement options like 401(k) and 403(b) plans.
For pilots, it sponsors a defined-benefit pension plan, a defined-contribution plan and gives access to a 401(k) that doesn't include any company match.
Such differences can compound into thousands of dollars in lost retirement income after decades of saving, according to Callan's defined-contribution practice leader, Lori Lucas.
WSJ: When Rolling Over, Make Sure You Don't Get Squished by Costs
We should add that StudentsFirst hasn't even strongly advocated for switching teachers to defined-contribution plans in New York because the political prospects are nonexistent.
So, like many employers in many places, it wants to phase in contributions for existing employees and substitute a defined-contribution scheme for new ones.
ECONOMIST: The workers may be biting off more than they can chew
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 defined-contribution plans also have a significant foothold in the public sector: most public universities, where faculty have been covered by defined-contribution plans for decades.
One must also note that Nokia has already begun the path of restructuring (the pension is already fully funded and mostly of a defined-contribution nature).
Instead, defined-contribution plans put all of the risk on untrained employees.
FORBES: 401(k) World: A Deeper Look into Tom Friedman's Nightmare
These same issues apply to those on private and defined-contribution pensions.
ECONOMIST: Buttonwood: A trillion here, $500 billion there | The
State and local governments that are currently outside of Social Security are giving serious consideration to shifting to a defined-contribution plan, as Utah has recently done.
FORBES: How Three Texas Counties Created Personal Social Security Accounts and Prospered
At the time of the great Wall Street crash of 1929, 10, 000 companies in America had defined-contribution plans in place (although not in their present form).
Those, of course, largely have been replaced with 401(k) and other "defined-contribution" plans, in which workers shoulder all of the risk involved in making their savings last.
With the shift from defined-benefit plans to defined-contribution plans, and the uncertain future of social security, boomers are on their own when it comes to financing retirement.
For starters, the majority of defined-contribution plans haven't added the Roth 401(k) in-plan conversion option since it was created by a federal law nearly two years ago.
应用推荐