21 04, 2021

DC Plans More Vulnerable to ERISA Litigation Than DB Plans

2021-04-21T10:54:57-07:00April 21st, 2021|Categories: ERISA|Tags: , , |

Source: AI-CIO.com Defined contribution (DC) retirement plans are far more susceptible to Employee Retirement Income Security Act (ERISA) lawsuits than defined benefit (DB) plans, lawyers argue in a lawsuit filed against The Wesco Distribution Inc. Retirement Savings Plan. “The potential for imprudence is much greater in defined contribution plans than in defined benefit plans,” said the lawsuit. The complaint, which alleges Wesco neglected its fiduciary duties by allowing excessive fees, said that companies with DC plans are much more [...]

24 03, 2021

Too embarrassed to ask: what’s the difference between a defined benefit pension and a defined contribution pension?

2021-03-24T14:53:59-07:00March 24th, 2021|Categories: Defined Benefit Plans|Tags: , |

A pension is simply a tax-efficient savings vehicle, or “tax wrapper”, that allows you or your employer to invest for your long-term future.  For most of us, the main goal of a pension is to provide us with money to live off in later life, usually once we’ve retired from full-time employment. The rules governing pensions can seem confusing, particularly as the government fiddles with them at almost every other budget. But at the most basic level, there are [...]

6 09, 2018

Some U.K. DC plan trustees think their investment strategies will never catch up to DB plans

2018-09-06T15:41:57-07:00September 6th, 2018|Categories: Retirement|Tags: , |

Forty percent of U.K. defined contribution plan trustees who believe that DC investment strategies lack sophistication of defined benefit funds feel they will never catch up, according to a survey by consultant Hymans Robertson. In the 2018 edition of the survey, 42% of U.K. defined contribution plan trustees said DC investment strategies lack the sophistication of those used by defined benefit funds, compared to 58% who felt DC strategies were on par with DB, according to the survey. Half [...]

13 02, 2018

New Case Study Examines How Dismantling Pensions Triggered Mass Exodus of Public Safety Workers

2018-02-13T13:50:20-08:00February 13th, 2018|Categories: Defined Benefit Plans|Tags: , , |

A new case study examines the impacts of the 2012 actions of the Town of Palm Beach to close its existing defined benefit (DB) pension systems for its employees, including police officers and firefighters. The new “combined” retirement plans offered dramatically lower DB pension benefits and new individual 401(k)-style defined contribution (DC) retirement accounts. Shortly thereafter, the town experienced a high rate of retirements and unprecedented early departures of experienced police officers and firefighters to neighboring towns that offered [...]

8 08, 2016

Employees working longer after shifting to defined contribution pension plans

2016-08-08T21:51:31-07:00August 8th, 2016|Categories: 401(k)|Tags: , |

Jaqui Parchment has seen firsthand the effects the shift from defined benefit pension plans to defined contribution plans has had on employees and employers. As senior partner and leader of Mercer’s Investment business for Canada, she provides consulting services to Mercer’s largest clients on investment issues. Retirement readiness, she says, is a major concern for her clients. “It’s had its ramifications,” she says. “The most obvious one is the risk in terms of providing retirement is shifting more towards [...]

19 02, 2015

The Economics of Retirement

2015-02-19T23:16:04-08:00February 19th, 2015|Categories: Retirement|Tags: , , |

When James M. Poterba started studying retirement finance, he knew he was venturing into fraught territory. Tens of millions of Americans compulsively check their 401(k) retirement accounts online and lie awake wondering how much they can save or, if they are already retired, how they can stretch fixed incomes. Even so, Poterba could not have known how readily people would share their anxieties. […]

10 02, 2015

NIRS: Shifting to DC did not save money for states

2015-02-10T23:04:27-08:00February 10th, 2015|Categories: Pension Funding|Tags: , |

Three states that shifted to defined contribution from defined benefit plans did not save money, said new case studies from the National Institute on Retirement Security. NIRS researchers looked at Alaska, Michigan and West Virginia, which switched new employees to defined contribution-only accounts to deal with pension underfunding and rising costs. After looking at demographic changes, benefit costs, actuarially required contributions, plan funding levels and retirement security, NIRS found the switch exacerbated pension funding problems and increased pension costs [...]

5 02, 2015

Simple Steps to Avoid Outliving Your Money in Retirement

2015-02-05T18:54:47-08:00February 5th, 2015|Categories: Retirement|Tags: , , |

Nearly all workers say guaranteed lifetime income is important in retirement. Yet few are doing anything about it. The slow switch from defined-benefit to defined-contribution retirement plans has been under way for three decades. But only now are workers starting to fully appreciate the impact. The vast majority of Americans say that having a guaranteed monthly check for the rest of their lives is important, according to a TIAA-CREF lifetime income survey. Nearly half say securing enough guaranteed income to [...]

3 02, 2015

How labour is trying to save your pension

2015-02-03T21:56:02-08:00February 3rd, 2015|Categories: Retirement|Tags: , , |

Municipal employees in the Town of Happy Valley-Goose Bay, Labrador have been locked out by their employees for almost three weeks in a fight that’s become all too familiar in recent years. Like unionized municipal workers in Quebec, transit workers in Saskatchewan and Bombardier workers in Thunder Bay, the sticking point in the Labrador municipal workers dispute is pension reform.  […]

4 12, 2014

Understanding Limits on PBGC Protection for Amounts Rolled Over From a Defined Contribution Plan

2014-12-04T23:55:21-08:00December 4th, 2014|Categories: PBGC|Tags: , |

The Pension Benefit Guaranty Corporation (“PBGC”) recently finalized its rule on insurance for amounts rolled over from a defined contribution plan to a defined benefit plan.  Although amounts rolled over will be subject to greater protections than apply for most other benefits (i.e., benefits derived from employer contributions), the full rollover benefit will not necessarily be protected if the plan terminates with insufficient assets. Employers should assess the impact of the limitations on PBGC protection for their plans and consider updating [...]

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