With people living longer and the shift to defined contribution (DC) plans, retirement concerns are have risen to the forefront. Having a defined benefit (DB) plan offering a life annuity benefit can combat participant longevity risk. But DB plans have lost their favor with many employers. The question is whether an employer-supported retirement model can be designed to sufficiently address both participant longevity risk and employer sustainability concerns.
This article was first published in the Spring 2015 issue of Benefits Law Journal.
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Longevity plans: An answer to the decline of the defined benefit plan
Defined contribution plans have essentially replaced defined benefit plans, but with defined contribution plans, participants take on longevity risk.