Defined benefit pensions provide lifetime retirement security, but need to be updated for today’s workforce. PBGC Director Josh Gotbaum talked about his ideas at a recent forum sponsored by Institutional Investor magazine. Here’s a March 20 report from the magazine’s Investor Intelligence Network website:
Pension Plans Need Freedom to Try New Things, Says PBGC Director
PBGC Director Joshua Gotbaum, speaking during a recent Institutional Investor panel session forecasting the future of America's retirement system (cloudy with a chance of crisis), urged industry members, legislators and fellow regulators to help create an environment in which plan sponsors are free to experiment with new kinds of plans.
- DB offers real advantages, but the requirements are so cumbersome that many employers are choosing to just not deal with them. "It feels like we are contracting our options not expanding them," Gotbaum said. "Even at this late date we can still do things to help companies to preserve their DB plans and experiment with DB-type plans. We need to make it easier for DB."
The retirement industry too long has been content with a product offering framework that emphasizes individual accounts and mutual funds – and has not sufficiently pushed for more pooling of assets, either for a single employer or other form of group, to bring costs down, Gotbaum said.
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