Allocation of Plan Assets on Termination

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Allocation of Plan Assets on Termination

When a company goes out of business or otherwise divests itself of a pension plan, the payment of all assets in the plan to all employees. The allocation may occur in one of two ways. Either the employees receive everything they have personally paid in premiums, plus interest, or they receive a portion of their benefits based upon what they would have been entitled to if the pension stayed active. In the latter option, employees paid more generally receive more than ones paid less.
References in periodicals archive ?
Still, the average allocation of plan assets to hedge funds was less than 5 percent, and the average allocation to private equity was less than 8 percent.
Revise investment strategy -- Reduce investment risk by changing the allocation of plan assets.
Two possible hedge approaches are to invest in interest futures or purchase a quasi-insurance policy--enough to hedge risk, but not large enough to result in a significant change in the allocation of plan assets.
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