This article reviews how global capital market performance in the third quarter of 2005 affected pension plans in major retirement markets worldwide. The impact of capital markets on these pension plans is twofold: On fund assets as a direct result of investment performance and on plan liabilities (as measured under...
Under the traditional approach to defined benefit plans, well-intended disciplinary and regulatory regimes have sought to restrict discretion, reduce uncertainty and risk, and protect workers and employers. Nevertheless the discouraging state of US defined benefit plans indicates that past efforts have gone awry. This paper suggests that a new approach...
Recent financial market and plan termination experiences have exposed the shortcomings of existing funding, disclosure, and premium rules governing private single-employer defined benefit pension plans in the United States. These rules were designed to provide predictability for plan sponsors and administrators, by insulating pension plans from the realities of economic...
Until recently, the main focus in the development of investment policy for defined benefit pension plans has been on plan assets. However, most critical variables for a defined benefit pension plan such as financial position, contribution requirements, and pension expense depend on the behavior of both assets and liabilities. Volatility...
This report discusses the recent report on the rules that govern the funding of defined benefit DB plans and the implications of those rules for the problems facing the Pension Benefit Guaranty Corporation PBGC and the DB pension system generally. In recent years, the PBGC has encountered serious financial difficulties....
The environment facing defined benefit pension plans today is probably the most hostile on record. In this tempestuous environment, effective management of systematic and active risks is more important than ever. Systematic risks can be reduced through effective diversification, but can never be eliminated completely. Active risks, or alpha risks,...
This paper outlines proposals for funding reform for defined benefit pension plans other than multiemployer plans. There is a threshold question as to whether reform should be based on modifications of current law or whether the current-law rules should be replaced in their entirety with a new structure. This would...
The benefit pension fund accounting rules and regulations directly affect a company’s earnings and balance sheets. Still, the company’s financial statements and accompanying notes are not enough for determining a company’s pension activity. The best solution to the problems surrounding the defined benefits plans is adhering to the bull market....
This paper argues that the appropriate discount rate to use to report defined benefit pension plan liabilities in the financial statements is a yield derived from an estimate of a double A corporate yield curve. It introduces a new class of credit spread models finding that they obtain more robust...
This paper extends the research of the earlier studies by comparing the expenses of mutual funds with those of defined benefit pension plans sponsored by state and local governments. Mutual funds and pension plans are similar in that they manage relatively large pools of assets. Nonetheless, there are marked differences...
The expenses borne by mutual funds for portfolio management are roughly the same as the expenses incurred by public pension plans for external management of their portfolios. The paper concludes that mutual funds overpaid for portfolio management is based on the inclusion of business, administrative, and other expenses in their...
Defined benefit pension plan is the employee compensation scheme that guarantees a specific benefit level at the retirement of the employee. The same entails costs to the organization. Length of service and amount of salary are important considerations towards determining an employee’s pension benefits. The paper examines the dynamics and...
This report establishes standards of financial accounting and reporting for the annual financial statements of a defined benefit pension plan plan. It applies both to plans in the private sector and to plans of state and local governmental units. It does not require the preparation, distribution, or attestation of financial...
Despite the integration of international capital markets and the relaxation of capital controls, U.S. defined benefit pension plans do not diversify internationally enough. This paper explores whether incorporating liabilities in the asset allocation decision can help explain pension plans' home bias. Incorporating pension liabilities proves not to explain pension plan...
Although pension finance theory says almost all defined benefit pension plans sponsored by publicly traded U.S. corporations should invest entirely in fixed income, 60% of assets are invested in equities. This paper offers a variation on the existing theory, removing the strong, but often unstated, assumption of transparency. The transparent...
TACOMA, Wash. -- Russell Investments has been hired by the Rhode Island State Investment Commission to be the $8.4 billion pension fund's new Aggregate Exposure Manager, responsible for improving the implementation of the plan's investments. Russell's appointment was one of three new relationships approved simultaneously by the Board...
CHICAGO -- UBS Global Asset Management today announced that its US Pension Fund Fitness Tracker, a quarterly estimate of the overall health of a typical US defined benefit pension plan, shows pension funding ratios rose 3% in the second quarter of 2008. After a painful start to the new year,...
AIRLINE INDUSTRY INFORMATION-C1997-2008 M2 COMMUNICATIONS LTD US aircraft manufacturer Boeing Co (NYSE: BA) has announced a new retirement benefit programme for non-union employees hired or rehired by the company on or after 1 January 2009. The new scheme will be a defined-contribution plan, instead of a...
CHICAGO, June 24 /PRNewswire-FirstCall/ -- The Boeing Company is introducing a new retirement benefit program for nonunion employees hired or rehired on or after Jan. 1, 2009. The new program will be a defined contribution savings plan that includes an automatic company contribution as well as a company...
WASHINGTON, June 18 /PRNewswire-FirstCall/ -- Rates of return for defined benefit DB pension plans outpaced those for employee-directed 401k plans during the most recent bull market from 2003 to 2006, according to an analysis by Watson Wyatt Worldwide, a leading global consulting firm. The comparison of investment...
