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Retirement Security: Trends in Marriage, Work, and Pensions May Increase Vulnerability for Some Retirees

Description: Testimony issued by the Government Accountability Office with an abstract that begins "The decline in marriage, rise in women's labor force participation, and transition away from defined benefit (DB) plans to defined contribution (DC) plans have resulted in changes in the types of retirement benefits households receive and increased vulnerabilities for some. Since the 1960s, the percentage of unmarried and single-parent families has risen dramatically, especially among low-income, less-educated individuals, and some minorities. At the same time, the percentage of married women entering the labor force has increased. The decline in marriage and rise in women's labor force participation have affected the types of Social Security benefits households receive, with fewer women receiving spousal benefits today than in the past. In addition, the shift away from DB to DC plans has increased financial vulnerabilities for some due to the fact that DC plans typically offer fewer spousal protections. DC plans also place greater responsibility on households to make decisions and manage their pension and financial assets so they have income throughout retirement. As shown in the figure below, despite Social Security's role in reducing poverty among seniors, poverty remains high among certain groups of seniors, such as minorities and unmarried women. These vulnerable populations are more likely to be adversely affected by these trends and may need assistance in old age."
Date: March 5, 2014
Creator: United States. Government Accountability Office.
Partner: UNT Libraries Government Documents Department

Retirement Security: Women Still Face Challenges

Description: A letter report issued by the Government Accountability Office with an abstract that begins "Over the last decade, working women’s access to and participation in employer-sponsored retirement plans have improved relative to men. Indeed, from 1998 to 2009, women surpassed men in their likelihood of working for an employer that offered a pension plan, largely because the proportion of men covered by a plan declined. Furthermore, as employers have continued to terminate their defined benefit (DB) plans and have switched to defined contribution (DC) plans, the proportion of women who worked for employers that offered a DC plan increased. Correspondingly, women’s participation rates in DC plans increased slightly over this same period while men’s participation fell, thereby narrowing the participation difference between men and women to 1 percentage point. At the same time, however, women contributed to their DC plans at lower levels than men."
Date: July 19, 2012
Creator: United States. Government Accountability Office.
Partner: UNT Libraries Government Documents Department

Retirement Security: Annuities with Guaranteed Lifetime Withdrawals Have Both Benefits and Risks, but Regulation Varies across States

Description: A letter report issued by the Government Accountability Office with an abstract that begins "Annuities with guaranteed lifetime withdrawals can help older Americans ensure they do not outlive their assets, but do present some risks to consumers. Two such products, variable annuities with guaranteed lifetime withdrawal benefits (VA/GLWB) and contingent deferred annuities (CDA), share a number of features but have some important structural differences. For example, both provide consumers with access to investment assets and the guarantee of lifetime income, but while VA/GLWB assets are held in a separate account of the insurer for the benefit of the annuity purchaser, the assets covered by a CDA are generally held in an investment account owned by the CDA purchaser. Consumers can benefit from these products by having a steady stream of income regardless of how their investment assets perform or how long they live, while at the same time maintaining access to their assets for unexpected or other expenses. VA/GLWBs and CDAs are complex products that present some risks to consumers and require them to make multiple important decisions. For example, consumers might purchase an unsuitable product or make withdrawal decisions that could negatively affect their potential benefits. Several insurers and regulators GAO spoke to said it was important for consumers to obtain professional financial advice before purchasing these products and making key decisions. These products can also create risks for insurers which, if not addressed, could ultimately affect insurers' ability to provide promised benefits to consumers."
Date: December 10, 2012
Creator: United States. Government Accountability Office.
Partner: UNT Libraries Government Documents Department

Retirement Security: Older Women Remain at Risk

Description: Testimony issued by the Government Accountability Office with an abstract that begins "Over the last decade, working women’s access to and participation in employer-sponsored retirement plans have improved relative to men. In fact, from 1998 to 2009, women surpassed men in their likelihood of working for an employer that offered a pension plan—largely because the proportion of men covered by a plan declined. Furthermore, as employers have continued to terminate their defined benefit plans and switch to defined contribution plans, the proportion of women who worked for employers that offered a defined contribution plan increased. Women’s higher rates of pension coverage may be due to the fact that they are more likely to work in the public and nonprofit sectors and industries that offer coverage, such as health and education."
Date: July 25, 2012
Creator: United States. Government Accountability Office.
Partner: UNT Libraries Government Documents Department

Retirement Security: Trends in Marriage and Work Patterns May Increase Economic Vulnerability for Some Retirees

Description: A letter report issued by the Government Accountability Office with an abstract that begins "Over the last 50 years, the composition and work patterns of the American household have changed dramatically. During this period, the proportion of unmarried and never-married individuals in the population increased steadily as couples chose to marry at later ages and live together prior to marriage. At the same time, the proportion of single-parent households more than doubled. These trends were more pronounced for individuals with lower levels of income and education and for certain racial and ethnic groups. Over the same period, labor force participation among married women nearly doubled."
Date: January 15, 2014
Creator: United States. Government Accountability Office.
Partner: UNT Libraries Government Documents Department

Retirement Security: Women Face Challenges in Ensuring Financial Security in Retirement

Description: A letter report issued by the Government Accountability Office with an abstract that begins "Women aged 65 and over will account for a growing segment of the U.S. population over the next several decades. Despite increases in women's workforce behavior in the past 65 years, elderly women have persistently high rates of poverty. Thus, it is important to understand the differences between men's and women's retirement income, and how women may fare given future reforms to Social Security and pensions. GAO was asked to examine (1) how women's retirement income compares with men's and the reasons for differences; (2) how certain life events such as divorce, widowhood, and workforce interruptions affect women's retirement income; and (3) the possible effect on women's retirement income of certain changes to Social Security and pensions that seek to mitigate the effects of differences in workforce participation patterns. To address these objectives, GAO reviewed the relevant literature, interviewed academics and other retirement experts, and used a microsimulation model to project future retirement income. GAO provided a draft of this report to the departments of Labor and Treasury, the Internal Revenue Service, and the Social Security Administration. Cognizant agency officials provided technical comments which were incorporated as appropriate. GAO is making no recommendations."
Date: October 11, 2007
Creator: United States. Government Accountability Office.
Partner: UNT Libraries Government Documents Department

Retirement Security: Challenges and Prospects for Employees of Small Businesses

Description: Testimony issued by the Government Accountability Office with an abstract that begins "About 14 percent of small employers sponsor some type of plan for their employees to save for retirement and these employers in general can face numerous challenges establishing and maintaining a plan. GAO's March 2012 report found that many of the small employers who were contacted said they felt overwhelmed by the number of plan options, plan administration requirements, and fiduciary responsibilities. For example, some small employers found it challenging to select investment funds for their plans. Small employers also cited other challenges in sponsoring a plan, including a lack of financial resources, time, and personnel. GAO's April 2012 review of select 401(k) plans--the most common type of plan sponsored by small employers--found that some smaller plan sponsors did not know about or fully understand fees they and their participants were charged, such as fees associated with group annuity contracts. In addition to these fees, participants in small plans often pay higher recordkeeping and investment management fees than participants in larger plans. GAO's work demonstrates the need for plan sponsors, particularly small sponsors, to understand fees in order to help participants secure adequate retirement savings. Any fees paid by participants, even a seemingly small amount, can significantly reduce retirement savings over time."
Date: July 16, 2013
Creator: United States. Government Accountability Office.
Partner: UNT Libraries Government Documents Department

Use of the Railroad Retirement Board Occupational Disability Program across the Rail Industry

Description: Correspondence issued by the Government Accountability Office with an abstract that begins "We recently reported that Long Island Rail Road (LIRR) workers applied for U.S. Railroad Retirement Board (RRB) occupational disability benefits at a rate 12 times higher than workers from the other commuter railroads covered under the Railroad Retirement Act. RRB provides an occupational disability benefit to eligible workers whose physical or mental impairments prevent them from performing their specific railroad jobs. For example, a railroad engineer who cannot frequently climb, bend, or reach, as required by the job, may be found occupationally disabled. On March 18, 2009, Congress asked us to conduct a systematic review of RRB's occupational disability program. Per our discussions following the release of our September 2009 report on LIRR and commuter rail workers' experience with the program, Congress refined its request. It told us that its primary interest was quickly determining whether unusual patterns in claims like those exhibited at LIRR exist elsewhere across the rail industry, including class I, II, and III railroads. This letter formally conveys the information we provided during a briefing with Congress on December 2, 2009. In summary, we found that no other rail employers in our analysis had the consistently high rates of occupational disability awards that existed at LIRR from calendar years 2004 to 2007, the most current data available at the time of our review."
Date: February 4, 2010
Creator: United States. Government Accountability Office.
Partner: UNT Libraries Government Documents Department

Answers to Key Questions about Private Pension Plans

Description: Correspondence issued by the General Accounting Office with an abstract that begins "This primer on private pensions provides information on the basic features of the private pension plan system and the federal framework that governs how private plans must operate. GAO answers questions about the types of plans that private employers may sponsor, the benefits these plans provide, and the basic requirements that govern how these plans are administered."
Date: September 18, 2002
Creator: United States. General Accounting Office.
Partner: UNT Libraries Government Documents Department

Key Events Leading to the Termination of the Delphi Defined Benefit Plans

Description: Correspondence issued by the Government Accountability Office with an abstract that begins "The Delphi Corporation was a global supplier of mobile electronics and transportation systems that began as part of the General Motors Corporation (GM) and was spun off as an independent company in 1999. Following bankruptcy in 2005, Delphi's six qualified defined benefit (DB) plans were terminated and trusteed by the Pension Benefit Guaranty Corporation (PBGC) in July 2009. These terminations culminated from a complex series of events involving Delphi, GM, various unions, the U.S. Department of the Treasury (Treasury), as well as PBGC. Congress asked us to examine a range of issues related to PBGC's termination of Delphi's DB plans, such as the decision to terminate, the efforts to secure plan assets, the treatment of collective bargaining agreements, and Treasury's role throughout the process. As discussed with Congressional staff members in December 2010, this report includes a timeline of key events leading to the termination of Delphi's plans. The timeline focuses, in particular, on events related to the reasons for GM providing retirement benefit supplements to certain Delphi employees, but not to others, and Treasury's role in those events. We will compare PBGC's process for terminating Delphi's pension plans with its process for terminating other large, complex plans in a future report."
Date: March 30, 2011
Creator: United States. Government Accountability Office.
Partner: UNT Libraries Government Documents Department

Determining the Taxable Portion of Federal Pension Distributions

Description: Correspondence issued by the General Accounting Office with an abstract that begins "Pursuant to a congressional request, GAO provided information on: (1) what reasons, if any, exist for the Office of Personnel Management (OPM) to report the taxable portion of annuity benefits for newly retired federal employees on the Form CSA 1099R (Statement of Annuity Paid); and (2) the feasibility of OPM's doing so."
Date: May 3, 1999
Creator: United States. General Accounting Office.
Partner: UNT Libraries Government Documents Department

Private Pensions: Opportunities Exist to Further Improve the Transparency of PBGC's Financial Disclosures

Description: A letter report issued by the Government Accountability Office with an abstract that begins "The Pension Benefit Guaranty Corporation's (PBGC) single-employer insurance program insures the pension benefits of over 34 million participants in almost 29,000 private sector defined benefit pension plans. The increase in PBGC's probable claims has raised questions about PBGC's monitoring and financial disclosure practices, including whether the information that PBGC discloses is sufficient for interested parties to understand the effect on PBGC's financial condition. GAO examined (1) the steps that PBGC takes to monitor and ensure the accuracy of its probable claims, (2) how PBGC's financial liability reporting compares with those of publicly traded companies, and (3) the steps PBGC has taken to improve the transparency of its financial reporting and whether additional improvement is needed."
Date: March 27, 2006
Creator: United States. Government Accountability Office.
Partner: UNT Libraries Government Documents Department

Retirement Savings: Automatic Enrollment Shows Promise for Some Workers, but Proposals to Broaden Retirement Savings for Other Workers Could Face Challenges

Description: A letter report issued by the Government Accountability Office with an abstract that begins "Although employer-sponsored retirement plans can be an important component of income security after retirement, only about half of all workers participate in such plans. To foster greater participation among workers who have access to such plans, Congress included provisions that facilitate plan sponsors' adoption of automatic enrollment policies in the Pension Protection Act of 2006. To foster greater retirement savings among workers who do not have access to an employer-sponsored plan, proposals have been made at the federal level for an "automatic IRA" and at the state level for state-based programs. Because of questions about the extent of retirement savings and prospects for a sound retirement for all Americans, GAO was asked to determine (1) what is known about the effect of automatic enrollment policies among the nation's 401(k) plans, and the extent of and future prospect for such policies; and (2) the potential benefits and limitations of automatic IRA proposals and state-assisted retirement savings proposals. To answer these questions, GAO reviewed available reports and data, and interviewed plan sponsors, industry groups, investment professionals, and relevant federal agencies."
Date: October 23, 2009
Creator: United States. Government Accountability Office.
Partner: UNT Libraries Government Documents Department

Thrift Savings Plan: Delayed Allocation of Failed System Development Costs to Participant Accounts

Description: Correspondence issued by the General Accounting Office with an abstract that begins "The Thrift Savings Plan (TSP) is a retirement savings and investment plan for federal employees, governed by the Federal Retirement Thrift Investment Board (Board). The TSP is a defined contribution retirement plan available to eligible federal employees. The TSP had about 2.6 million participants and held about $100.6 billion in Net Assets Available for Benefits as of December 31, 2001, and about 3 million participants and $102.3 billion in Net Assets Available for Benefits as of December 31, 2002. In 1997, the Board awarded a contract to American Management Systems, Inc. (AMS) to develop and implement a new record-keeping system for the TSP. In 2001, after several implementation delays, the Board terminated the contract, and the Board's former Executive Director filed a lawsuit against the contractor on behalf of the TSP. On June 20, 2003, 2 days after we provided a draft of this report to the Board for its review, a settlement between the parties was reached. Then, on June 23, 2003, the net unrecovered cost from the system development failure was allocated to participant account balances as recommended in our draft report. While the loss has now been allocated to participant accounts, albeit on a belated basis, we believe there is value associated with issuing this product in response to the request to illustrate the operative principles and concepts that should govern allocation of costs in the future. Since the TSP is an important component of retirement income for many federal employees, participants must be assured of proper accounting of their funds. Therefore, Congress asked us to examine federal oversight of the TSP and the TSP's accounting for its failed system development costs. Our report on federal oversight of the TSP was issued in April 2003. ...
Date: July 22, 2003
Creator: United States. General Accounting Office.
Partner: UNT Libraries Government Documents Department

Private Pensions: Alternative Approaches Could Address Retirement Risks Faced by Workers but Pose Trade-offs

Description: A letter report issued by the Government Accountability Office with an abstract that begins "Recent losses in the stock market and poor economic conditions underscore that many U.S. workers are at risk of not having an adequate income in retirement from pension plans. The dramatic decline in the stock market has diminished pension savings and reportedly led to low levels in older Americans' confidence in their ability to retire. Even before the current economic recession, research indicated that pension benefits are likely to be inadequate for many Americans. This report addresses the following questions: (1) What are key risks faced by U.S. workers in accumulating and preserving pension benefits? (2) What approaches are used in other countries that could address these risks and what trade-offs do they present? (3) What approaches do key proposals for alternative plan designs in the U.S. suggest to mitigate risks faced by workers and what trade-offs do they entail? To complete this work, we reviewed research on defined benefit and defined contribution plans, and interviewed pension consulting firms, industry experts, academics, and other relevant organizations in the U.S. and abroad. In addition, we used a microsimulation model to assess the impact of certain strategies to increase pension coverage on accumulated benefits. The Department of Labor and Department of Treasury provided technical comments on this report"
Date: July 24, 2009
Creator: United States. Government Accountability Office.
Partner: UNT Libraries Government Documents Department

Private Pensions: Fulfilling Fiduciary Obligations Can Present Challenges for 401(k) Plan Sponsors

Description: A letter report issued by the Government Accountability Office with an abstract that begins "American workers increasingly rely on 401(k) plans for their retirement security, and sponsors of 401(k) plans--typically employers--have critical obligations under the Employee Retirement Income Security Act of 1974 (ERISA). When acting as fiduciaries, they must act prudently and solely in the interest of plan participants and beneficiaries. The Department of Labor (Labor) is responsible for protecting private pension plan participants and beneficiaries by enforcing ERISA. GAO examined: (1) common 401(k) plan features, which typically have important fiduciary implications, and factors affecting these decisions; (2) challenges sponsors face in fulfilling their fiduciary obligations when overseeing plan operations; and (3) actions Labor takes to ensure that sponsors fulfill their fiduciary obligations, and the progress Labor has made on its regulatory initiatives. To address these objectives, GAO administered a survey asking sponsors how they select plan features and oversee operations, reviewed industry research, conducted interviews, and reviewed related documents."
Date: July 16, 2008
Creator: United States. Government Accountability Office.
Partner: UNT Libraries Government Documents Department

Mutual Funds: SEC Should Modify Proposed Regulations to Address Some Pension Plan Concerns

Description: A letter report issued by the Government Accountability Office with an abstract that begins "Mutual fund investments represent more than 20 percent of Americans' pension plan assets. Since late 2003, two abusive trading practices in mutual funds have come to light. Late trading allowed some investors to illegally place orders for funds after the close of trading. Market timing allowed some investors to take advantage of temporary disparities between the value of a fund and the value of its underlying assets despite stated policies against such trading. The Securities and Exchange Commission (SEC) has proposed regulations intended to stop late trading and reduce market timing. We were asked to (1) report on what is known about how these practices have affected the value of retirement savings of pension plan participants, (2) describe the actions taken by SEC and the Department of Labor (DOL) to address these practices, and (3) explain how plan participants may be affected by SEC's proposed regulations."
Date: July 9, 2004
Creator: United States. Government Accountability Office.
Partner: UNT Libraries Government Documents Department

Private Pensions: Some Key Features Lead to an Uneven Distribution of Benefits

Description: A letter report issued by the Government Accountability Office with an abstract that begins "Despite sizeable tax incentives, private pension participation has remained at about 50 percent of the workforce. For those in a pension plan, there is concern that these incentives accrue primarily to higher income employees and do relatively little to help lower income workers save for retirement. The financial crisis and labor-market downturn may have exacerbated these difficulties. Therefore, we examined (1) recent trends in new private pension plan formation, (2) the characteristics of defined contribution plan participants contributing at or above statutory limits, (3) how suggested options to modify an existing credit for low-income workers might affect their retirement income, and (4) the long-term effects of the recent financial crisis on retirement savings. To answer these questions, GAO reviewed reports, federal regulations, and laws, and interviewed academics, agency officials, and other relevant experts. We also analyzed Department of Labor and 2007 Survey of Consumer Finance (SCF) data, and used a microsimulation model to assess effects of modifying tax incentives for low-income workers. We incorporated technical comments from the departments of Labor and Treasury, the Internal Revenue Service, and the Pension Benefit Guaranty Corporation as appropriate."
Date: March 30, 2011
Creator: United States. Government Accountability Office.
Partner: UNT Libraries Government Documents Department

Private Pensions: Changes Needed to Better Protect Multiemployer Pension Benefits

Description: A letter report issued by the Government Accountability Office with an abstract that begins "Thirty years ago Congress enacted protections to ensure that participants in multiemployer pension plans received their promised benefits. These defined benefit plans are created by collective bargaining agreements covering more than one employer. Today, these plans provide pension coverage to over 10.4 million participants in approximately 1,500 multiemployer plans insured by the Pension Benefit Guaranty Corporation (PBGC). In this report, GAO examines (1) the current status of nation's multiemployer plans; (2) steps PBGC takes to monitor the health of these plans; (3) the structure of multiemployer plans in other countries; and (4) statutory and regulatory changes that could help plans provide participants with the benefits they are due. To address these questions, GAO analyzed government and industry data and interviewed government officials, pension experts and plan practitioners in the United States, the Netherlands, Denmark, United Kingdom, and Canada."
Date: October 18, 2010
Creator: United States. Government Accountability Office.
Partner: UNT Libraries Government Documents Department

Private Pensions: Changes Needed to Provide 401(k) Plan Participants and the Department of Labor Better Information on Fees

Description: A letter report issued by the Government Accountability Office with an abstract that begins "American workers are increasingly relying on 401(k) plans, which allow pre-tax contributions to individual accounts, for their retirement income. As workers accrue earnings on their investments, they also pay a number of fees that may significantly decrease their retirement savings. Because of concerns about the effects of fees on participants' retirement savings, GAO examined (1) the types of fees associated with 401(k) plans and who pays these fees, (2) how information on fees is disclosed to plan participants, and (3) how the Department of Labor (Labor) oversees plan fees and certain business arrangements. GAO reviewed industry surveys on fees and interviewed Labor officials and pension professionals about disclosure and reporting practices."
Date: November 16, 2006
Creator: United States. Government Accountability Office.
Partner: UNT Libraries Government Documents Department

Retirement Income: Ensuring Income throughout Retirement Requires Difficult Choices

Description: A letter report issued by the Government Accountability Office with an abstract that begins "As life expectancy increases, the risk that retirees will outlive their assets is a growing challenge. The shift from defined benefit (DB) pension plans to defined contribution (DC) plans also increases the responsibility for workers and retirees to make difficult decisions and manage their pension and other financial assets so that they have income throughout retirement. GAO was asked to review (1) strategies that experts recommend retirees employ to ensure income throughout retirement, (2) choices retirees have made for managing their pension and financial assets for generating income, and (3) policy options available to ensure income throughout retirement and their advantages and disadvantages. GAO interviewed experts about strategies retirees should take, including strategies for five households from different quintiles of net wealth (assets less debt); analyzed nationally representative data and studies about retirees' decisions; and interviewed experts and reviewed documents about related policy options."
Date: June 7, 2011
Creator: United States. Government Accountability Office.
Partner: UNT Libraries Government Documents Department

Delphi Pensions: Key Events Leading to Plan Terminations

Description: Testimony issued by the Government Accountability Office with an abstract that begins "The termination of the six defined benefit plans that were sponsored by the Delphi Corporation (Delphi) and the provision of benefit protections to some Delphi employees, but not others, culminated from a complex series of events involving Delphi, the General Motors Corporation (GM), various unions, the U.S. Department of the Treasury (Treasury), and the Pension Benefit Guaranty Corporation (PBGC). When Delphi spun off from GM in 1999, three unions secured an agreement that GM would provide a retirement benefit supplement (referred to as "top-ups") for their members should their pension plans be frozen or terminated and they were to suffer a resulting loss in pension benefits. These three unions were: (1) the International Union, United Automobile, Aerospace, and Agricultural Implement Workers of America (UAW); (2) the International Union of Electronic, Electrical, Salaried, Machine and Furniture Workers, AFL-CIO (IUE); and (3) the United Steelworkers of America (USWA). No other Delphi employees had a similar agreement to receive a top-up, including salaried workers and hourly workers belonging to other unions. Over the course of events that unfolded over the next decade, the agreements with these three unions ultimately were preserved through the resolution of the bankruptcies of both GM and Delphi. Because Delphi's pension plans were terminated with insufficient assets to pay all accrued benefits, and because PBGC must adhere to statutory limits on the benefits it guarantees, many Delphi employees will receive a reduced pension benefit from PBGC compared with the benefits promised by their defined benefit plans. Those Delphi employees receiving the top-ups will have their reduced PBGC benefit supplemented by GM while others will not."
Date: September 11, 2013
Creator: United States. Government Accountability Office.
Partner: UNT Libraries Government Documents Department

Private Pensions: Recent Experiences of Large Defined Benefit Plans Illustrate Weaknesses in Funding Rules

Description: A letter report issued by the Government Accountability Office with an abstract that begins "Pension funding rules are intended to ensure that plans have sufficient assets to pay promised benefits to plan participants. However, recent terminations of large underfunded plans, along with continued widespread underfunding, suggest weaknesses in these rules that may threaten retirement incomes of these plans' participants, as well as the future viability of the Pension Benefit Guaranty Corporation (PBGC) single-employer insurance program. We have prepared this report under the Comptroller General's authority, and it is intended to assist the Congress in improving the financial stability of the defined benefit (DB) system and PBGC. We have addressed this report to each congressional committee of jurisdiction to help in their deliberations. This report examines: (1) the recent funding and contribution experience of the nation's largest private DB plans; (2) the funding and contribution experience of large underfunded plans, and the role of the additional funding charge (AFC); and (3) the implications of large plans' recent funding experiences for PBGC, in terms of risk to the agency's ability to insure benefits."
Date: May 31, 2005
Creator: United States. Government Accountability Office.
Partner: UNT Libraries Government Documents Department

Private Pensions: Timely and Accurate Information Is Needed to Identify and Track Frozen Defined Benefit Plans

Description: Correspondence issued by the General Accounting Office with an abstract that begins "While private-sector pensions help millions of Americans achieve retirement income security, the number of private defined benefit (DB) plans1 has declined substantially over the past two decades. Recently, those concerned with the viability of the private defined benefit pension system point to significant increases in pension contributions plan sponsors must make and to the fact that most plans are currently underfunded. The underfunding of plans, due in large part to the sharp decline in the stock market combined with a general decline in interest rates, has increased substantially. The Pension Benefit Guaranty Corporation (PBGC), whose single-employer insurance program insures the benefits of over 34 million workers and retirees in private defined benefit plans, estimated that the total underfunding exceeded $350 billion as of September 4, 2003. According to employer groups, plan sponsors face inflated and unpredictable pension contributions that have greatly diminished the attractiveness of maintaining DB plans. As a result, employer groups have suggested that plan sponsors may consider freezing their plans rather than confronting the possibility of increased pension contributions. A plan "freeze" could have adverse consequences for the retirement income security of participants because new employees are precluded from participating in the plan, and current participants might not receive additional benefit accruals. Because timely and accurate information on plan freezes could be important in assessing the overall health of the private DB system, Congress asked us to determine how many DB plans have been frozen since 2000."
Date: December 17, 2003
Creator: United States. General Accounting Office.
Partner: UNT Libraries Government Documents Department