Highlights of a GAO Forum:
The Future of the Defined Benefit System and the Pension Benefit Guaranty Corporation
GAO-05-578SP: Published: Jun 1, 2005. Publicly Released: Jun 1, 2005.
Additional Materials:
- Full Report:
- Accessible Text:
Contact:
(202) 512-5491
contact@gao.gov
Office of Public Affairs
(202) 512-4800
youngc1@gao.gov
Employer-sponsored defined benefit pension plans face unprecedented challenges in the midst of significant changes in our nation's retirement landscape. Many defined benefit plans and the federal agency that insures them, the Pension Benefit Guaranty Corporation (PBGC), have accumulated large and growing deficits that threaten their survival. Meanwhile, the percentage of American workers covered by defined benefit plans has been declining for about 30 years, reflecting a movement toward defined contribution plans (e.g., 401(k) plans) and perhaps fundamental changes in how our society thinks about who should bear responsibility and risk for the retirement income security of American workers. It is imperative that policymakers address not only the challenges facing the defined benefit system and the PBGC, but also consider broader questions about overall retirement income policy. To address these issues, GAO convened a diverse group of knowledgeable individuals who have been influential in shaping the defined benefit pensions debate over the years. Participants included government officials, researchers, accounting experts, actuaries, plan sponsor and employee group representatives, and members of the investment community.
Forum participants debated both the specifics of potential changes to the regulations governing America's defined benefit pension system and broader ideas about how policymakers should address retirement income security. There were varying levels of agreement on the following statements. Current pension funding rules do not adequately ensure sound funding in plans that are at the greatest risk of termination, and the federal government needs to do more to hold employers accountable for the benefit promises they make. Addressing deficiencies in the pension funding rules would be more effective and more important than reforming the PBGC premium structure, since policymakers should focus on getting employers to fulfill the promises they make to employees. Greater pension funding flexibility could help maintain adequate pension funding and remove disincentives that have stopped plan sponsors from contributing more to their plans in the past. PBGC's premium structure should better reflect the risk that a pension plan presents to the solvency of PBGC's pension insurance program. Improvements should be made to the transparency and timeliness of pension plan financial information that is reported to plan participants, regulators, and those who invest in the plan sponsor's stocks and bonds. Any reforms of pension funding rules and premium structures would be easier to achieve by separately addressing "legacy costs"--the costs from terminated and currently underfunded defined benefit plans. Although the traditional defined benefit system has been in retreat for about 30 years, this trend might be halted if policymakers would clarify the legal ambiguities surrounding cash balance and other hybrid plans. Rather than focusing on promoting certain types of pension plans, policymakers should identify and encourage those features of pension plans (both defined benefit and defined contribution) that are most likely to provide sufficient income security for American retirees.
Oct 30, 2020
-
Retirement Security:
Other Countries' Experiences with Caregiver PoliciesGAO-20-623: Published: Sep 30, 2020. Publicly Released: Oct 30, 2020.
Sep 24, 2020
-
Retirement Security:
Older Women Report Facing a Financially Uncertain FutureGAO-20-718T: Published: Sep 24, 2020. Publicly Released: Sep 24, 2020.
Aug 28, 2020
-
Retirement Security:
DOL Could Better Inform Divorcing Parties About Dividing SavingsGAO-20-541: Published: Jul 31, 2020. Publicly Released: Aug 28, 2020.
Aug 13, 2020
-
Retirement Security:
Older Women Report Facing a Financially Uncertain FutureGAO-20-435: Published: Jul 14, 2020. Publicly Released: Aug 13, 2020.
Jun 16, 2020
-
Retirement Security:
BLS Should Explore Ways to Improve the Accuracy, Timeliness, and Relevance of Its Cost-of-Living MeasurementsGAO-20-422: Published: Jun 16, 2020. Publicly Released: Jun 16, 2020.
Feb 27, 2020
-
Private Pensions:
IRS and DOL Should Strengthen Oversight of Executive Retirement PlansGAO-20-70: Published: Jan 28, 2020. Publicly Released: Feb 27, 2020.
Jan 9, 2020
-
Social Security Disability:
Action Needed to Help Agency Staff Understand and Follow Policies Related to Prescription Opioid MisuseGAO-20-120: Published: Jan 9, 2020. Publicly Released: Jan 9, 2020.
Dec 18, 2019
-
Capitol Police:
Potential Effects of Raising the Mandatory Retirement AgeGAO-20-137R: Published: Dec 18, 2019. Publicly Released: Dec 18, 2019. -
Millennial Generation:
Information on the Economic Status of Millennial Households Compared to Previous GenerationsGAO-20-194: Published: Dec 13, 2019. Publicly Released: Dec 18, 2019.
Oct 21, 2019
-
Military Pensions:
Servicemembers Need Better Information to Support Retirement Savings DecisionsGAO-19-631: Published: Sep 19, 2019. Publicly Released: Oct 21, 2019.
Looking for more? Browse all our products here