EGTRRA Permanency   DB Plan Design   Portability   DB Investment Consulting   DC Plan Design

Monumental pension reform is on the horizon for the Defined Benefit (DB) market. The recently passed Pension Protection Act of 2006 (PPA), along with financial reporting requirements being imposed by the Financial Accounting Standards Board, will have a significant impact on plan design, funding and financial statements.

When it comes to DB plan design, increasing overall costs, contribution volatility, and balance sheet impact from pension reform is resulting in many plan sponsors reconsidering their current plan designs. As they evaluate their alternatives, they will need to determine the effects of any changes on long-term costs, as well as the amount of retirement income potentially available to participants.

In doing so, they will require guidance from advisors like you, with access to providers capable of redesign analysis and the ability to develop and implement a thorough communication campaign to position the change favorably with their participants.

Consider asking plan sponsors if they have thought about whether or not they have the right plan in place for their organizations given the changes from pension reform. How do their plans compare with those of their competitors? What would be the costs/benefits of amending, redesigning, or freezing their plans? By asking these questions, you will quickly cause plan sponsors to realize that enlisting your help could be critical to the health of their plans.

Tune in next time for a tip on retirement savings portability.

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