June 2012 Archive

Why use a ReDefined Benefit strategy?

June 27, 2012

In this article we provide a summary of why we think employers should consider a ReDefined Benefit (ReDB™) design, rather than a 401(k) or other defined contribution (DC) plan, as a core retirement plan for employers. Read More

Cash Balance Plan Design

June 27, 2012

It seems just about everyone in the retirement industry is writing articles about cash balance plans these days, from actuaries to investment managers to third party administrators. All agree they are a great way to create additional income deferral for business owners in professional service firms as well as other owner-operated businesses. High contribution limits, design flexibility and ease of understanding are among the features that make these plans such a good fit. Read More

Cash Balance Plan Administration in the 21st Century

June 27, 2012

As many companies are coming to appreciate the value of the Market Return cash balance plan design, managing economic risk and contribution volatility has become much more realistic. Today’s cash balance plans now work in harmony with 401(k)/Profit Sharing Plans to deliver significant risk reduction for sponsors, with predictable contributions and manageable costs. So why shouldn’t they look and feel just like a defined contribution plan to participants as well? The answer is they really should, and with the aid of some leading edge technology they most certainly can. That’s why we’ve developed the October Three Daily Cash Balance Platform. Read More

How low can you go? Interest rates and DB plans

June 27, 2012

In this article we discuss the impact of the decline in interest rates on defined benefit plans. We begin with a discussion of what has happened to interest rates over the long- and short-term. Next, we discuss the Federal Reserve's "Operation Twist" and its effect on interest rates. We then turn to the impact of decreased interest rates on valuations, lump sum calculations, de-risking strategies and cash balance plans. We conclude with a brief discussion of proposed interest rate stabilization legislation. Read More

Plain talk about cash balance plans

June 26, 2012

In this article we discuss the risks to plan sponsors presented by a "traditional" cash balance plan -- that is, a plan that provides interest credits based on an IRS-approved fixed income yield. Read More

May 2012 Pension Finance Update

June 01, 2012

Pension sponsors suffered a substantial setback in May – declining stock markets pulled down assets while declining interest rates pushed up liabilities. When the dust settled, gains from the first quarter of 2012 had been wiped out and both “model” plans we track now find themselves in slightly worse shape than at the end of 2011. Download

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