Modifying Pension Plan Better Than DC Switch?

Closing a public employee defined benefit pension plan can cost substantially more than adjusting an existing plan, a report contends. The research issue brief, “On the Right Track? Public Pension Reforms in the Wake of the Financial Crisis,” by the National Institute on Retirement Security, says 45 states have enacted defined benefit (DB) pension plan reforms since 2008 to achieve affordability, sustainability and human resource goals rather than switching to defined contribution (DC) plans. The most common public pension plan modifications that have been implemented are increased employee contributions, reduced DB benefits for new hires including changes to retirement ages, and cost of living adjustment reductions for retirees and existing workers.  Click here for the Plan Sponsor article.