GE plans to freeze defined benefit accruals of 20K workers and offer lump sum buyouts to 100K former employees, seeking to cut debt. This aligns GE with most larger US companies today as defined benefit pension plans grow rare, says Wharton’s Olivia S. Mitchell here. Image courtesy of…Read More
GE is freezing defined benefit plans for 20K workers and offering 100K former workers lump-sum buyouts, as it seeks to cut debt and risk. This is part of a decades-long trend away from defined benefit pension and toward defined contribution plans in the US, states Wharton’s Olivia S. Mitchell in…Read More
Multiemployer pension plans in the United States are in dire financial straits. It’s estimated that the retirement plans of workers and retirees covered by these plans in the mining, retail trade, construction, transportation and other such sectors face a $54 billion shortfall today.…Read More
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 aired…Read More
Some observers have recently suggested that multiemployer or industry pension plans in the U.S. have bounced back fully since the 2008 recession, and it’s time to break out the champagne. Not so fast!…Read More
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
Concerns are growing about how to best manage risk in retirement. Traditional defined benefit plans can impart considerable risk to employers, while 401(k)-type plans place all or most risk on employees.…Read More
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
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
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
