Converting from Defined Benefit to Defined Contribution: The “Free” Money Pays Down Unfunded Liabilities and Pays Dividends to Taxpayers
Implementing a DC system delivers immediate payroll savings for the new plan’s participants. Using these savings to shore up the unfunded liabilities from the preexisting DB plans will ensure that past promises made are kept. At the same time, the new DC plan participants rest assured that each and every paycheck, funds are being deposited into an account belonging to them. Taxpayers win as the escalation in retirement overhead costs level off and eventually realize the full benefit of the savings.
Converting Pension Plans from Defined Benefit to Defined Contribution: The Myths and the Messaging Part 1
Welcome to part one in a series on how to successfully explain the conversion of public pension plans from defined benefit (DB) to defined contribution (DC) to legislators and the…