Defined Benefit Plans
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Much 'To Do' to Keep Retirement Running Smoothly
Revisiting the company's investment plan statement should be the first order of business, and then start building your paper trail to ward off IRS inquiries.
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NHL Players Score New Pension Plan
The defined contribution plans, created during the last league lockout in 2005, will be restructured into voluntary contribution plans and neither plan will be terminated.
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Employers Hungry for Returns When Updating 401(k) Menus
Plan sponsors see big bounce in performance after adding new funds but it doesn't last.
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Tax Bill Will Reduce 401(k) Taxes, Ease Fund Transfers
A provision tucked into the American Taxpayer Relief Act will expand the opportunities for employees to transfer funds from traditional 401(k) plans to Roth 401(k)s. Employees who are in lower tax brackets now compared with when they retire will reap big tax savings from such transfers.
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Changes in Tax Rules Could Cut 401(k) Plan Sponsorship: Survey
Almost half of employers, 46 percent, said they would consider dropping their plans under the 28 percent tax credit scenario, while one-third would do so in the event of a limited tax exclusion or under the 20-20 proposal.
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Clients Kind of Blue Over IBM's 401(k) Surprise
Starting next year, Big Blue's match will be contributed as a lump sum on Dec. 31.
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American Pilots Accept Contract With Pension Freeze Provision
The pilots' approval clears the way for parent company AMR Corp., Fort Worth, Texas, to continue its Chapter 11 bankruptcy proceedings. The pension proposal is contingent on the resolution of the bankruptcy proceedings.
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Pension Envy for Employees Not On the Government's Dime
A recent analysis by Hearts & Wallets of individuals who are near or in retirement showed that those with a public pension are happier in retirement and have higher income than those who don't have a defined-benefit plan.
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Hostess Brands to Terminate Pension Plan as Part of Liquidation
Hostess suspended payments to the 42 multiemployer pension plans to which it contributes in August 2011. The company's IBC Defined Benefit Plan had about $56 million in assets and $111 million in liabilities as of April 30, according to the PBGC.
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States Up the Pressure on Retirement Plans for Private Workers
California's new state-administered retirement savings program for certain private-sector workers could serve as a model for other states.
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American Airlines Freezes Its Pension Plans
In January, American said it would seek bankruptcy court approval to terminate the plans, which have about 130,000 participants.
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PBGC Names Richmond Pension Fund Chief to Lead Benefits Unit
Philip R. Langham was named director of the Pension Benefit Guaranty Corp.'s benefits and payments department.
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401(k) Plan Contribution, Other Retirement Plan Limits Upped for 2013
The maximum contribution that can be made to 401(k) plans will increase next year, as will the maximum benefit that can be funded through defined benefit plans, the Internal Revenue Service announced Oct. 18.
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Pension Payouts
When defined benefit plan participants take a lump sum, they move out of the plan. That means plan sponsors that cash out participants have a smaller plan with tighter variables—including contribution rates.
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More Employers Adding Automatic Enrollment to Defined Contribution Plans: Survey
In 2012, 65 percent of employers surveyed by Towers Watson & Co. offered an automatic enrollment feature, up from 57 percent in 2011 and 51 percent in 2010.
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Group Health Care Plan Costs to Rise 6.3 Percent in 2013: Aon Hewitt
The average group health care plan cost per employee is projected to rise to $11,188 per employee next year, according to an analysis released Oct. 3 by Lincolnshire, Illinois-based Aon Hewitt.
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Fewer Employers Offering Defined Benefit Pension Plans to New Salaried Employees
Just 11 Fortune 100 companies offered a traditional defined benefit plan to new salaried employees as of June 30, down from 14 in 2011, 17 in 2010 and 19 in 2009.
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NFL to Freeze Referees' Pension Plan Under Labor Agreement
Retirement benefits will be provided through a defined contribution plan to new referees immediately and for all officials beginning in 2017.
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Boeing Proposes Ending Defined Benefit Plan for New Employees
Boeing's proposal would amount to a 40 percent reduction in benefits from current levels. The union's contract with Boeing expires Oct. 6.
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Pension Plan Funding Levels Up Slightly in August: Study
Defined benefit plans offered by the 100 U.S. employers with the largest pension programs were an average of 72.4 percent funded as of Aug. 31, up from 70.9 percent as of July 31, but sharply lower compared with the 78.7 percent funded ratio at the end of 2011.
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National 401(k) Day Brings Retirement Planning Problems to Light
This year's Sept. 7 kickoff date for National 401(k) Day "is a great trigger event for plan sponsors to have the conversation of how to get the most out of your 401(k)," says Chris Augelli, vice president of sales operations at ADP Retirement Services. "But it's not a one-time event.
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Bill Seeks Government Sale of GM Stock to Fund Delphi Pension Benefits
The legislation, which will be introduced next week when the Senate reconvenes, is intended to cover all benefits lost to hourly and salaried retirees when the Pension Benefit Guaranty Corp. took over the Delphi's six defined benefit plans in 2009.
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Employee Retirement Statements Get a Fee Makeover
Participants in defined contribution plans should receive the first of two fee-disclosure notices by Aug. 30. This notice should include a listing of all the investments available in the plan as well as the options' fees and historical performance.
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Former Wells Fargo Employee Says Company Fired Him Over Daughter's Cancer Costs
According to a lawsuit filed Aug.
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Funding Levels for Biggest Employer Pension Plans Plunge in July: Milliman
In all, the funding deficit jumped by a record $120 billion last month.
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Law Will Cut Defined Benefit Pension Contributions, but Increase PBGC Premiums
Employers will continue to value plan liabilities based on interest rates on top-rated corporate bonds for three different segments, averaged over 24 months. Segments refer to when benefits are paid to participants.
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American Airlines Asks to End Retiree Health, Life Benefit Coverage
The airline and parent company AMR said they never promised to provide benefits for life and reserved their rights to modify the plans.
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General Motors Co. Offers Pension Buyout to Salaried Workers
General Motors Co., in a statement, said the moves should reduce its U.S. pension liability by about $26 billion, a major step in its bid to reduce the $134 billion pension obligation on its books, which GM says is the largest pension liability for any U.S. corporation.
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Most Firms With DB Plans to Keep Them Open to New Hires
Among defined benefit plans offered to new hires, 54 percent are hybrid plans such as cash balance plans, which combine elements of defined benefit and defined contribution plans, but legally are defined benefit plans.
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Employers Urge Congress to Pass Pension Funding Relief Legislation
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Ending a Defined Benefit Plan Takes Shutdown Strategy, Experts Say
Before a plan can be terminated, it needs to have all the funds necessary to pay benefits to employees. Once that happens, plan sponsors can start the process of shutting down the plan.
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Ford to Offer Lump-Sum Pension Payouts to Ex-Workers
When individuals take a lump-sum payment rather than continued monthly benefits, Ford no longer will face such risks as paying more than expected if the individuals live longer than expected.
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Illinois' Pension Fix: Workers to Pay More, Retire Later
Workers would keep their defined benefit contributions, something that has largely disappeared from the private sector.
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In an Apparent First, a Public Pension Plan Files for Bankruptcy
The development of the restructuring will set a precedent, particularly at a time when local government budgets and defined benefit plans are under strain.
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Fidelity-ABB Ruling First in What Could Be String of Excessive-Plan-Fee Cases
The case is significant because new federal rules that go into effect this summer will require 401(k) plan service providers—such as record keepers and investment managers—to report detailed fee information to plan sponsors.
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Retirement Savings Tax Breaks Safe—for Now
At a House hearing, neither Dems nor Republicans seemed eager to tinker with main selling point of 401(k)s and IRAs.
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PBGC Director Gotbaum Discusses New Retirement Plan Options
'What we need to do is provide options so that, case by case—employer and employee—they have choices. … And I think that, actually, is an important part of the future,' Joshua Gotbaum told the National Press Club on April 3.
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Pension Plan Funding Levels Hit Record Low in 2011: Milliman
The market value of pension plan assets increased by about $37 billion to about $1.246 trillion in 2011. But the value of plan liabilities leaped by about $133 billion to about $1.573 trillion.
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U.S. Senate Passes Pension Funding Relief in Highway Bill
The U.S. Senate on March 14 approved allowing corporate defined benefit pension plans to base their contribution calculations on interest rates over a 25-year average rather than current interest rates, which have sent contribution payments soaring.
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Dreams of Comfortable Retirement Ebb Among Americans: EBRI
Thirty percent of those surveyed have virtually no savings or investments, and 60 percent reported less than $25,000 in savings, excluding the value of their home or any defined benefit plans.
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Fortune 1000 Firms' Pension Plan Funding Falls to 78% in 2011
The aggregate funding level of 422 pension plans offered by Fortune 1000 companies fell to 78 percent in 2011, down from 84 percent in 2010 and 81 percent in 2009, according to Towers Watson & Co. analysis.
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Northeastern Companies Reap Benefits of Healthy Habits
Six winners of the New England Employee Benefits Council's Best Practice awards for 2011 include Ocean Spray's Moms at Work program and Staples' use of computer games to entice the office supply company's younger workers to save for retirement.
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GM Pension Plan Underfunding Rises in 2011
To reduce liability growth, GM will completely freeze defined benefit plans covering salaried employees, effective Oct. 1, completing a process it began several years ago.
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GM to Phase Out Salaried Pensions, Shift Workers to 401(k) Plan
About 70 percent of General Motors' 26,000 salaried U.S. workers are enrolled in a defined benefit, or traditional, pension plan. Those workers will be shifted to a 401(k) plan starting on Oct. 1, said Cindy Brinkley, GM's vice president of global human resources.
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Michigan Unions Sue to Halt Mandated DB-or-DC Choice
A Michigan law requiring state employees to either contribute 4% of pay to the $9.
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PBGC Updates Estimate of Funding Relief for American Airlines
According to the Pension Benefit Guaranty Corp., American Airlines received specific funding relief in the Pension Protection Act of 2006 and an Iraq War spending bill in 2007 that allowed airlines to spread their unfunded liability in 2008 over 10 years instead of seven.
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Treasury's Lifetime-Income Proposals Lean Heavily on Education
Observers find proposals to be well intended, but add that workers have a lot to learn on annuities.
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American Airlines Wants to Terminate Pension Plans
The termination, if approved, would shift billions of dollars of promised but unfunded benefits to the Pension Benefit Guaranty Corp., resulting in the biggest loss ever for the agency.
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Raytheon, Lockheed Martin to Add Billions to Pension Plans
Raytheon Co. expects to contribute a combined $4.2 billion to its pension plans over the next three years, while Lockheed Martin Corp. foresees a $1.1 billion contribution to its pension trust, according to fourth-quarter earnings statements from both firms.
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Boeing to Add $1.5 Billion to Pension Plans in 2012
The Chicago-based company contributed $500 million to its pension plans in 2011.
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Funded Status of Pension Plans Falls for Second Year: Mercer
In the aggregate, the plans' funding deficit hit $484 billion as of Dec. 31, 2011, up from $315 billion a year earlier and $229 billion as of Dec. 31, 2009.
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DC Assets Eyed By Investment Giants
With their sights set firmly on the trillions of defined contribution plan assets expected to move into customized target-date funds before the end of the decade, Bridgewater Associates LP and AQR Capital Management LLC are looking to make sure their risk-parity and hedge fund strategies are...
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Affluent Anxious About Retirement Too, Wells Fargo Finds
Four in 10 of those surveyed said that their biggest fear about retirement is that they 'will do all the right things and it still won't be enough for tomorrow.'
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Hewlett-Packard Foresees Nearly $600 Million in 2012 Pension Contributions
The Palo Alto, California-based tech giant contributed a total of $279 million to its U.S. pension plans and $458 million to its non-U.S. pension plans in 2011.
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Most Financial Execs Feel Pension Plans can Hurt Company, Survey Indicates
Of survey respondents, 68 percent said their companies have closed defined benefit plans to new or all employees in the past five years.
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N.Y. State Official Blasts 401(k)s as DB Replacement
'The reality is that 401(k)s were never intended to take the place of pensions,' according to New York state comptroller Thomas DiNapoli in a speech at the New School's Schwartz Center for Economic Policy Analysis in New York City.
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PBGC Boosts Maximum Benefit in 2012 to Nearly $56,000
Changes in the maximum benefit guarantee, which will increase 3.4 percent next year, are linked to wage inflation.
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Analysis Notes More Large Employers Freeze Defined Benefit Plans
In 2004, as the corporate drive to freeze defined benefit plans was picking up momentum, only 45, or 7.1 percent of 633 Fortune 1000 companies with defined benefit plans, had frozen at least one plan, reports consultancy Towers Watson.
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PBGC Deficit Hits Record $26 Billion
As was the case in the prior fiscal year, the Pension Benefit Guaranty Fund did not incur any multibillion-dollar losses in fiscal 2011.
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Pension Funding Levels Improve, but Still Well Below 2011 Peak: Mercer
The consultancy attributed the funding improvement to an 11 percent gain in equity values in October, partially offset by a decrease in corporate bond yields.
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Report: Governmental Entities Benefit Most from Early Retiree Program
Federal agency says of the more than $2.7 billion that was paid out through June 30, 45.6 percent went to governmental entities while 36.6 percent went to commercial entities, such as self-funded private employers.
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Hybrid Pension Plan on the Drawing Board in California
The proposal would create a pension plan with elements of defined benefit and defined contribution plans and would also raise the retirement age for new state and local government employees to 67.
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401(k) Plan Contribution, Other Retirement Plan Limits Upped for 2012
The 2012 limits, which reflect a methodology set by federal law, are based on increases in the cost of living.
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DC, DB Plans Hurt by Rising Health Care Costs
Aside from health care benefits, the only corporate benefits budget item that grew between 2009 and 2011 was corporate 401(k) plans, which increased two percentage points to 15 percent in the latest survey.
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401(k)s Hang on as Stock Market Ride Gets Rough
Financial advisers and executives at retirement plan providers said that employees, while tending toward caution, do not appear to be panicked. During the wild swings a few weeks ago, participants largely sought information.
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Report Highlights Continued Decline in Defined Benefit Plans
Plan executives ‘are starting to realize that it’s not the plan design that drives [pension plan funding] volatility, but the deliberate risk-seeking behavior that results in mismatching of assets to liabilities,’ according to a recent Mercer study.
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Creating Ideal Defined Contribution Plan Takes Strong Will, Firm Focus
Whether it is out-of-pocket costs or costs associated with resources, expense can be a key deterrent in getting to the optimal defined-contribution plan. Cost can make plan sponsors reluctant to add advisory services or even automated features.
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IRS Extends Deadline to Alter Defined Benefit Plans
The one-year extension will likely give employers more time to prepare plan documents.
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Study Hispanics Lag on Plan Participation
The percentage of U.S.-born Hispanic workers participating in a plan was twice as high as the rate of Hispanic workers born outside the U.S., 40 percent to 20 percent, respectively.
