Old-line defined benefit plans and safe-harbor defined contribution plans earned mere "Cs" under a new grading system from the American Academy of Actuaries.
The actuaries, on the other hand, gave "As" to Iowa Sen. Tom Harkin’s idea of establishing privately run, universal retirement accounts and the New Brunswick (Canada) shared-risk design model, which provides defined benefits in an annuity form. They also gave the South Dakota Retirement System a "B."
Grades are based on alignment, governance, efficiency and sustainability – principles in the academy’s Retirement for the AGES initiative.
Not only does the actuaries’ new system grade plans and proposed legislation, but it also provides a guide to what’s working and what’s not.
“The overall grades provide a general assessment of whether a system is well designed to achieve its retirement-income purpose,” said Academy Senior Pension Fellow Donald Fuerst. “This assessment is based on factors such as whether the system is sustainable, supports good governance and decision-making, and avoids imposing undue burdens on stakeholders.”
In case you were wondering, the task force is hard at work assessing several other retirement-income systems and proposals for future release.
Detailed assessments containing the analysis of the five systems and proposals are available on the academy’s website at www.actuary.org.