Pension Plans:

Termination of Plans With Excess Assets

HRD-86-89BR: Published: Apr 30, 1986. Publicly Released: May 30, 1986.

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In response to a congressional request, GAO reported on defined benefit pension plan terminations involving the reversion of excess plan assets to employers.

GAO found that: (1) a higher-than-expected rate of return on investments was most often cited as the reason plans had excess assets at termination; (2) changes in corporate structure and employers' desire to use excess plan assets for non-pension-related purposes were most often cited as primary reasons for plan terminations; (3) most terminated plans were replaced by other plans, and defined contribution plans were used more often than defined benefit plans as replacements; and (4) Pension Benefit Guaranty Corporation, Internal Revenue Service and Department of Labor guidelines encouraged some employers to provide defined benefit replacement plans rather than defined contribution plans or no replacement plans at all.

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