The Financial Crisis and Private Defined Benefit Plans

Source: Alicia H. Munnell, Jean-Pierre Aubry, and Dan Muldoon, Center for Retirement Research at Boston College, Issue in Brief, IB #8-18, November 2008

The brief’s key findings are:
• Defined benefit pension plans – unlike 401(k)s – shelter individuals against financial turmoil.
• But falling asset values may require employers to boost contributions by perhaps $90 billion in 2009.
• And higher contributions amid a slowing economy could trigger some layoffs, bankruptcies, or plan freezes – reducing retirement income for affected workers.

Requiring firms to dramatically increase pension funding in a struggling economy does not make sense.

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