A recent report suggests defined benefit plans are simply de-risking rather than disappearing. Of the 30% of plan sponsors surveyed by Towers Watson and Institutional Investor Forums who offer the DB plan to new hires, more than 70% expect to still offer a DB plan in five years. Moreover, 75% of companies with closed plans expect at least some of the current participants to still be accruing benefits five years from now.
Still, when a DB plan is severely underfunded and the plan sponsor decides to terminate, the Pension Benefit Guaranty Corporation enters the picture as trustee, attempting to ensure the remaining plan assets are fairly distributed to the plan’s participants. But some experts maintain that the routine appointment of the PBGC as the trustee of terminated plans has created administrative burdens beyond what the agency can handle.
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