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Market Return Cash Balance plans

2021 Retirement Policy – A Year In Review

Throughout the year, we have followed the performance of the interest rate and securities markets, tracking their effect on retirement finance. As of mid-December, interest rates are up 30-40 basis points for plans with typical duration, and the S&P 500 is up 25% on the year.

Plan design and 2018 market performance

In this article we consider the “gains” and “losses” sustained by retirement plans of different designs, based on the performance of the asset and interest rate markets in 2018. How, and in what different ways, did 2018 market performance affect participants in and sponsors of these plans? Summary We consider four different basic plan designs:…Read More

Portman and Cardin propose comprehensive retirement policy legislation

Senators Portman (R-OH) and Cardin (D-MD) have released a summary and discussion draft of “A Bill To Enhance Retirement Security” (“Portman Cardin 2018”), proposing significant changes to current rules not included in either the House Republicans’ Family Savings Act (FSA) or the Senate’s bipartisan Retirement Enhancement and Savings Act (RESA). In this article we review…Read More

Advantages to a Market Return Cash Balance Plan Design

As discussed in our Cash Balance (CB) Survey on “Cash Balance Plans – 2018 Survey and Trends”, professional service firms have significantly increased their adoption of Market Return Cash Balance plans over the past twelve years. In addition to the conversion of existing Fixed Rate plans, virtually every new Cash Balance Plan is incorporating the…Read More

Cash Balance Plans: 2018 Survey and Trends

In this report we review the use of cash balance features in defined benefit plans sponsored by U.S. employers with a focus on the evolution of interest crediting bases utilized by those plans. Our emphasis on interest crediting is prompted by current and prospective cash balance plan sponsors seeking interest crediting bases that are more…Read More

Current legislation: Neal Simplification Proposal

We begin a brief series on current retirement saving legislation. This is an election year, and it’s unclear that any retirement policy legislation will move in this Congress. But there are a number retirement policy issues on which there is bipartisan consensus (at a minimum) that something should be done – including, e.g., improving 401(k)…Read More

More 401(k) Bashing, And a Fix (reprinted from HRE)

I posted here earlier this month about a provocative Wall Street Journal piece in which the creators and early adopters of the 401(k) retirement-savings vehicle lament the revolution they started. Their point: They had no intention of watching the concept turn into the sole — and highly inadequate — savings receptacle for employees. Now, on…Read More

Let the Retirement Pendulum Swing Freely to a Better Place for All

The movement to a DC-oriented private retirement system has raised concerns by policymakers, employees and even some of the employers who have embraced this trend. The chief concern can be summed up as the total shifting of risks to employees – the risks that they won’t save enough, the risk that they will use the…Read More

How partners upgraded their cash balance plans

Partners of a specialized medical practice were faced with an expensive dilemma when the yearly return on their cash balance plan investments fell quite a bit short of the annual 4% fixed- return target. Not only would partners be required to make up the difference by increasing the current annual contribution by 25%, but the…Read More