plans were also hit hard by a 30-year bull market in bonds, the decade-long stagnation in the equity markets and the lack of viable options to extend duration for pension investment managers all exhibit signs of changing for the better, said Rich Rausser, senior vice president of client services at Pentegra.
For early boomers with no defined-benefit
accruals, 67% are considered at risk; 41% of early boomers with some accruals are at risk.
The new defined-benefit
funding rules, effective for plan years beginning after Dec.
Risk may increase if large defined-benefit
plans begin to struggle or fail, especially if the Pension Benefit Guaranty Corp.
Separate disability and survivor benefits, currently a part of most defined-benefit
plans, would need to be included in all public employee collective bargaining agreements.
plans within a controlled group pooled all of their investments into a master trust that held employer stock.
Under this arrangement, all the risks and rewards of the pension plan investments are borne by the employer, as in a traditional defined-benefit
At present, companies are allowed to operate only defined-benefit
plans but face difficulties in funding guaranteed benefits because of the sluggish stock market.
Some employers seem to have concluded that the administrative hassles of sponsoring a pension plan are so large that the only way they can win is by not offering a defined-benefit
plan at all," he said.
Minimum Funding Standards for Single-Employer Defined-Benefit
85-6, a defined-benefit
plan with a surplus resulting from actuarial error may allow that surplus to revert to the employer on the plan's termination.
There is a general assumption that many companies have abandoned traditional defined-benefit
plans, but the survey shows that the largest companies clearly haven't," said Allen Reed, committee chairman and president of General Motors Investment Management Corp.