House Minority Leader John Boehner (R-Ohio) last week unveiled a plan to prop up the nation's struggling defined benefit and defined contribution retirement plan systems, and offer help to Americans in boosting retirement savings.
The 411 on the plan:
* Doubles the allowable smoothing of DB assets (from 10% to 20%) for two years.
* Raises catch-up contribution limints for 401(k)s and IRAs.
* Extends the suspension of minimum required distributions (currently through 2009) through 2012.
* Requires interest payments only for two years on 2008 DB plan losses and extends amortization of those losses from seven to nine years.
* Doubles the amount of income older workers may earn -- from $14,160 to $28,320 -- before having Social Security benefits reduced.
What do you think? Both the DC and DB systems have been on bleeding since last fall (and for DB plans, even before that). Will this plan help bandage up some of the wounds? Comment and let me know.
Showing posts with label defined benefit. Show all posts
Showing posts with label defined benefit. Show all posts
Monday, March 30, 2009
Wednesday, February 25, 2009
Tip of the Day: DB sponsors, go to Plan B
Okay, so maybe most pension plan sponsors are already on Plan Q in terms of how to stop the blood-letting in their plans due to the economic crisis, but a recent report by Associate Editor Lydell Bridgeford on BenefitNews.com highlights analysis from Watson Wyatt sponsors may want to consider. Although it's far from ideal, Alan Glickstein, senior retirement consultant at Watson Wyatt, says employers may need to rob Peter to pay Paul, so to speak.
"Changes in funded status are wreaking havoc with the projections companies have made," says Glickstein. "Large and unexpected pension contributions will require companies to divert funds they had earmarked for other business activities into their pension plans precisely when they can least afford it."
Meanwhile, 75% of U.S. pension plan sponsors report that their organizations have already transferred assets out of equities and into bonds or alternatives, according to a survey by SEI's Institutional Group, an asset management firm. The survey questioned 157 American and international pension executives who oversee pensions ranging from $30 million to more than $5 billion in assets.
"Changes in funded status are wreaking havoc with the projections companies have made," says Glickstein. "Large and unexpected pension contributions will require companies to divert funds they had earmarked for other business activities into their pension plans precisely when they can least afford it."
Meanwhile, 75% of U.S. pension plan sponsors report that their organizations have already transferred assets out of equities and into bonds or alternatives, according to a survey by SEI's Institutional Group, an asset management firm. The survey questioned 157 American and international pension executives who oversee pensions ranging from $30 million to more than $5 billion in assets.
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