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Defined Benefit Pension Plans Poised For Comeback

Defined Benefit pension plans are poised to make a comeback, says Pentegra Retirement Services. Its white paper says DB plan economics are shifting and will afford employers the opportunity for lower funding costs, thereby positioning DB plans to once again become one of the most cost effective methods of providing adequate retirement income to employees. Factors and economics that caused significant increases in required contributions to DB plans are showing signs of slowing and reversing themselves. Historically low interest rates, which cause plan liabilities to increase every time they drop, appear to have nearly hit bottom and are poised to begin rising as soon as the Federal Reserve ends the its expansionary monetary policy. Other underlying macroeconomic trends ‒ such as the 30-year bull market in bonds, the decade-long stagnation in the equity markets, and the lack of viable options to extend duration for pension investment managers ‒ all exhibit signs of changing for the better. The paper is at DB Comeback

Courtesy of Benefits and Pensions Monitor website News Alerts

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