Title
Quantitative Comparison of US Private Employers’ Defined Benefit Plans
Document Type
Article
Identifier Data
10.1891/JFCP-2021-0031
Publisher
Springer Publishing Connect
Publication Source
Journal of Financial Counseling and Planning
Rights Management
CC-BY-NC-ND
Abstract
The focus of this paper is to quantitatively evaluate and compare three of the most popular defined benefit plan types based on various variable assumptions. The decision of when to retire and take a pension, or being given the option to change plans, often happens only once. This makes the evaluation and comparison critical. This paper provides a numerical analysis with a broad perspective so that employees with varying career situations and retirement plans can better evaluate their financial standing. Data sources include standard economic assumptions used in valuing pension plans, as well as a survey of employer sponsored pension plans. Recent pension plans provide more flexibility by paying out pensions as a single lump sum, however, these plans generally provide lower benefits.
