Abstract:The corporate world is reconsidering the cost-effectiveness of defined benefit pension plans while contemplating a change to defined contribution plans. This article begins by examining the three primary risks faced by sponsors of most DB pension plans-investment risk, interest rate risk, and longevity risk-and shows how shifting these risks to employees through a DC plan would affect both the corporation and the individual. Although DC plans clearly help companies manage risks, they provide at best an incompl… Show more
“…Employees, however, may be offered the opportunity to exchange their fixed denominated benefits for variable unit benefits, and plan assets are invested to reflect these choices. Such a plan has been dubbed a Retirement Shares Plan (Fuerst, 2006).…”
“…Employees, however, may be offered the opportunity to exchange their fixed denominated benefits for variable unit benefits, and plan assets are invested to reflect these choices. Such a plan has been dubbed a Retirement Shares Plan (Fuerst, 2006).…”
“…At the normal retirement age, the employee receives an annual retirement income based on the number of retirement shares accumulated over his working life. During retirement, annual income also varies with investment performance (Fuerst 2006). The RSP risk sharing approach became a model for the UFCW benefit design project.…”
Section: Inspirations For Benefit Design and Governance Innovationmentioning
Links to third party websites are provided by Oxford in good faith and for information only. Oxford disclaims any responsibility for the materials contained in any third party website referenced in this work.
scite is a Brooklyn-based organization that helps researchers better discover and understand research articles through Smart Citations–citations that display the context of the citation and describe whether the article provides supporting or contrasting evidence. scite is used by students and researchers from around the world and is funded in part by the National Science Foundation and the National Institute on Drug Abuse of the National Institutes of Health.