A
defined-benefit pension plan is an account into which employers directly deposit funds to provide employees with remuneration upon death, retirement, or early separation from employment due to disability.
MICHIGAN The Michigan Education Association (MEA) and several public employee groups recently fought efforts by some state legislators to change the state's
defined-benefit pension plan that covers teachers and other public employees.
Michael Hudson may be right about "The Social Security Swindle" [Essay, April], but he is dead wrong about the origin of the
defined-benefit pension plan. In 1950, he writes, General Motors established a "new form of compensation" by withholding money from paychecks "much like the Social Security Administration was doing ...
Because it is a
defined-benefit pension plan, the employee can choose to receive a lump-sum payment (preferred by most employees) or an annuity.
There are currently an estimated 169,700 active government employees--including those in central government, in municipal government, and in most public corporations--in a
defined-benefit pension plan, whereby pensions are linked to salary and years of service.
For the past decade, Darrell's full-time work at Gateway has provided her with a
defined-benefit pension plan that will pay her about $841 a month after she retires at age 62 in 2024.
arm of Marsh Inc., is replacing its
defined-benefit pension plan based on final salary with a plan whose benefits will be calculated on a "career revalued" basis.
The estate's major asset was a
defined-benefit pension plan. The decedent died within six months of the time he changed the beneficiary designations on his pension accounts, without realizing the complications these changes would later cause.
The machinists and flight attendants are being targeted as they are the only two employee groups to have a
defined-benefit pension plan and not a defined contribution plan and that despite the deferral of payments it would not effect the pensioners' monthly sum.
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.
REFLECTIONS: ERISA Section 204(h), as amended by the Economic Growth and Tax Relief Reconciliation Act of 2001, provides that a
defined-benefit pension plan may not be amended to provide a significant reduction in the rate of future benefit accrual, unless the plan administrator provides notice describing the reduction to each individual whose benefit is adversely affected and to each employee organization representing these individuals; the plan is subject to an excise tax under Sec.
This may include knowing what optional forms of benefits are available under a plan's terms as well as devising an appropriate formula for dividing the benefits of a
defined-benefit pension plan. Since some government and other plans may not be divided, it may be appropriate to, suggest awarding the non-participant spouse other marital assets or to develop a compensating alimony arrangement.
