This article by Richard M. Todd was recently published in the Denver Business Journal, Volume 60, Number 33, January 23-29, 2009, (Denver Business Journal).
Many retirement industry experts expect the 111th Congress to undertake an extensive review of our retirement system.
Time has shown that defined benefit pension plans suffer from a fatal flaw: They spread risk without being clear about how, and by whom, the risks are borne. Surpluses in defined benefit plans lead to employers becoming exempt from the requirement to make their annual contributions, as well as result in plan participants and corporations fighting over the ownership of the surplus. Regulators, and even the courts, often step in to arbitrate the disputes.
Similarly, when surpluses turn to deficits during market collapses, plan participants become at odds with bondholders and shareholders about how the financial shortfall should be allocated.
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