If you like working with defined-contribution plan
participants, you're better off being in the Northeast or West.
Households with no remaining years to contribute to their defined-contribution plan
feel the impact of a defined-benefit accrual more keenly than those who have just a few more years left to contribute.
Management and union negotiators at The Associated Press said on Friday they had struck a tentative deal that would freeze the news cooperative's longstanding defined-benefit plan and substitute it with a defined-contribution plan
. Additionally, union members will vote on a 33-month contract that gives them 1-1/2 percent annual pay raises, no health-insurance payment increases and improved job security.
The most common replacement for the traditional defined-benefit plan is a defined-contribution plan
, such as a 401(k) or 403(b), which enables savings but generally does not address the issue of investment risk and longevity risk upon retirement.
In West Virginia, for example, only 74 of the 22,000 teachers in the defined-contribution plan
have accrued more than $100,000 over the course of their careers.
It elected to close out its defined-benefit pension plan, which it did in 2004, and roll out a new defined-contribution plan
; that started with new employees, then 60-90 days later with the rest of the employee base.
ERISA, which applies only to private employers, requires that any retirement plan assets, whether under a traditional pension one or a defined-contribution plan
such as a 401(k), be held in trust, separate from corporate assets and thus secure from company creditors.
Moving toward a privatized defined-contribution plan
would, by definition, convert our social security system into a fully funded plan.
Due to these restrictions, the introduction of multitier plans may be the available approach; with this structure, a defined-contribution plan
is the only option available to new employees, and existing employees have the option of staying under the old plan or moving to the new arrangement.
So for individuals earning $82,501 or higher per year who do not contribute to any other type of defined-contribution plan
and whose employer does not contribute to their 401(k), the new limits would increase their 401(k) contribution limit by up to $3,500.
Meanwhile, the lower house's Committee on Health, Labor and Welfare approved another pension reform bill authorizing introduction of a defined-contribution plan
modeled after the U.S.
This rule requires coordination of post-retirement medical benefits provided to key employees with their defined-contribution plan