The third quarter of 2012 has seen a rash of companies offering lump-sum payouts to participants in their defined benefit pension plans.
At least 10 pension funds have followed in the footsteps of auto giants Ford and General Motors in offering lump-sum payments to vested participants. The number of companies joining the movement away from defined benefit pensions was helped along by provisions of this summer's highway bill that allowed more companies to offer lump-sum payouts than were permitted under the Pension Protection Act of 2006, according to a story in Pensions & Investments.
Companies such as Sears Holding, Thomson Reuters, Equifax, New York Times and Archer Daniels Midland all jumped on the bandwagon, mostly as a way to save on expenses in their defined benefit plans. The lump-sum payouts were only offered to certain classes of participants, such as those who have already retired or those who had only a small amount invested in the plan.
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