This article from the Pension Rights Center compiles a list of private sector employers who have reduced their “defined benefit” retirement plans so far this year. It’s pretty long.

“Defined benefit” plans are structured to pay out retirement benefits regardless of the plan’s ability to pay - a recipe for eventual plan collapse. Nevada’s government offers this kind of plan to its employees. Under PERS (Public Employee Retirement System) employees will get from 50% to 75% of their highest three years salary upon retirement, depending on how many years they actually worked.

“Defined contribution” retirement plans, on the other hand, pay out what was paid into them over the years (by either the employer or the employee themselves) plus investment earnings. The contributions are not taxed as income in the years contributed, but are taxed as income in retirement years, when it is presumed the person’s tax bracket will be lower.

Increasingly, only government offers “defined benefit” retirement plans because non-government organizations are now required to report the unfunded liabilities associated with such plans.

Add to Technorati Favorites. This entry was posted on Tuesday, October 2nd, 2007 at 7:46 pm tagged Public Retirement. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.