Interview: Treasury Department Rescinds Obama-Era Rules on Lump-Sum Pension Payments

Olivia S. Mitchell and Elizabeth Kennedy discuss implications of the treasury department’s decision to allow employers to pay out retirees’ pensions with a one-time lump sum payment, thus reversing Obama-era guidance that had banned this practice. Listen to the full piece above. Interview begins at 3:35. This segment originally airedRead More

Do Americans Participate Enough In Retirement Plans?

Recently some analysts have queried: why do so few Americans participate in their pension plans? For this purpose, the pension participation rates, or the fraction of employees who either contribute to a defined contribution (DC) plan or are covered by a defined benefit (DB) plan, is often used as a key performance metric for the U.S. voluntary employer plan system.Read More

Multiemployer Pension Plans In Crisis: Troubled Plans Need Public Resources To Survive

There is an emerging financial crisis among multiemployer pension plans in America. These plans are a subset of private sector defined benefit pensions covering 10 million workers and retirees. Most critical are the projected bankruptcies of the Teamsters Central States and the United Mineworkers of America plans, making front page news for the last several months. These plans and many others were undermined by two financial market crashes between 2000 and 2009, corporate bankruptcies, de-regulation, and over-regulation. It will now take more than hope to fix them.Read More

Putting The Pension Back Into Retirement

Defined contribution plans – often known as 401k plans – have become the mainstay of US company pensions, yet their main function has been to get employees to save and invest during their work years. These plans haven’t been successful at delivering lifetime income benefits, as a rule: fewer than one-fifth of all such plans today help workers convert their plan assets into retirement paychecks.Read More

A Proposal For Allowing State Pension Buyouts

Many U.S. state and local employee pensions are facing dire problems as massive plan liabilities come due, threatening to drain government coffers. As Robert Novy-Marx and Joshua Rauh wrote in the Journal of Finance, 21 state pensions held less than 40 percent of the assets needed to pay benefits. Their estimate of the aggregate “funding gap” faced by states was roughly $2.5 trillion in 2009. Since then, the story has not improved, and it has likely worsened. Puerto Rico recently joined Detroit as a case study of fiscal and public pension mismanagement and failure, and the Puerto Rican pension is essentially without any assets.Read More