With just 13% of credit unions offering their employees defined-benefit
plans, is a shift underway that could potentially open up the window for employers to increase participation?
A REPORT FROM the Employee Benefit Research Institute found that having a defined-benefit
plan at age 65 reduces the risk of retiring with inadequate income for boomers and Generation X workers by almost 12 percentage points.
pension plans are consistently earning higher rates of return than 401(k) plans, according to an analysis released in February.
But, the jury is still out on whether the right retirement options include defined-benefit
(DB) plans, defined-contribution (DC) plans, cash balance plans--or a mix of more than one.
EBPs include defined-benefit
, defined-contribution, 401(k) and ESOP, health and welfare, and vacation and severance plans sponsored by a single company or several employers under common ownership.
The cost of state defined-benefit
retirement plans has risen from $160 million in 2000 to $2.
In Cooper, (27) the litigants challenged two successive incarnations of a defined-benefit
plan--the first, a version of a pension-equity plan, and the second, a cash-balance formula.
Over the last few years, the total underfunding in the defined-benefit
pension system has deteriorated to the point where the Pension Benefit Guaranty Corporation (PBGC), the federal agency responsible for protecting private sector defined benefit plan benefits, estimates that total plan underfunding grew to more than $400 billion as of December 31, 2002, and still exceeded $350 billion as of September 4, 2003.
One of the most important issues facing the pension world today involves companies replacing their traditional, defined-benefit
pension plans with cash-balance plans.
The government wants to submit the new defined-benefit
pension bill to the ongoing Diet session with a view to it taking effect on April 1, 2002.
Hybrid pension plans are defined-benefit
plans in which employees' benefits are expressed in terms of immediate lump-sum payments instead of as annuities after retirement.