Chapter 9 PENSION FUNDS. Pension Plans zA fund established for the eventual payment of retirement...
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Transcript of Chapter 9 PENSION FUNDS. Pension Plans zA fund established for the eventual payment of retirement...
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Chapter 9
PENSION FUNDS
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Pension Plans
A fund established for the eventual payment of retirement benefits.
Plan Sponsors Corporate or private plans Public plans Individual plans
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Types of Pension Plans
Defined Benefit Plans
Defined Contribution Plans
Hybrid Plans
Cash Balance Plans
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Regulation
Employee Retirement Income Security Act (ERISA) of 1974 Funding standards Fiduciary standards Minimum vesting standards Insurance program
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Management of Pension Funds
Plan Sponsors
Management Firms
Both Sponsors and Management
Firms
Consulting Firms
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Retirement Resources
Public Pension Plans
Private Pension Plans
Personal Savings
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Social Security
A public defined benefit retirement plan supported by payroll taxes.
Features: Pay-as-you-go system Treasury securities fund Revenues are based on payroll taxes of
employed personsDependency ratio is currently low,
but is expected to increase in the future.
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Future of Social Security
Investing a portion of the Social Security portfolio in non-Treasury assets.
Privatizing a portion of an individual’s retirement assets.
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Retirement Planning
Loss of public confidence in Social Security
Shift from defined benefit pension plans to defined contribution pension plans
IRAsVarious types of personal savings
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Pension Funds Around the World
Germany Public Pension
System Aging Population Pension Reform Private Pension
Funds
Japan Public and
Corporate Pension Program
Aging Population Defined Benefit
Plan Defined
Contribution Plan