Existing pension underfunding only grew worse once the plans were closed. (Photo: Shutterstock)
Even though some states have followed the trend of private industry in closing defined benefit plans in favor of an alternative such as defined contribution or cash balance plans, it hasn’t helped either those states or their retirees.
So says a study from the National Institute on Retirement Security, which found instead that trying to head off problems such as underfunded pension plans and even difficulty in recruiting new workers were instead amplified.
In fact, in the case studies for Alaska, Kentucky, Michigan, and West Virginia, each of which closed their pension plans and switched to an alternative, it was found that existing pension underfunding only grew worse once the plans were closed, and costs actually increased.
Continue Reading for Free
Register and gain access to:
- Breaking benefits news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical converage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
Marlene Satter
Marlene Y. Satter has worked in and written about the financial industry for decades.
