eBook (epub), 273 Nombre de pages
Mike brings to this work his comprehensive experience and consummate technical talent in a beautifully readable book. A treasure.
--Frank Cummings, Former Adjunct Lecturer in Law at UVA Law School, Columbia Law School, NYU Law School, and ALI-ABA
Retirement Savings Policy reviews the basic policies that govern retirement savings plans, and their real world application, focusing on the key issues of finance, taxation, fiduciary conduct, and employee choice. The discussion is framed around the three fundamental challenges confronting employers and employees today - the pension legacy, the 401(k) revolution, and the pressure, from policymakers, regulators, opinion leaders, and individuals, for changes that will put retirement security within reach of all Americans.
With more than 40 years' experience in the field, Michael P. Barry provides both a wealth of practical detail - best practices and concrete solutions - and a broad framework for understanding the issues surrounding retirement plans and strategies. The result is a comprehensive introduction to the forces that drive sponsor, participant, and policymaker decision-making.
This is the perfect book for benefits and financial professionals who want a better understanding of the basic rules that govern retirement plan administration but also serves those interested in truly understanding the nuances and issues surrounding retirement plans and policies. The approach is practical, focusing on how US retirement plans actually work, how they are taxed (and not taxed), how they are regulated.
But it is also conceptual, devoting considerable attention to an understanding of why these plans work the way they do. Why regulators and policymakers are so focused on a handful of issues - expanding coverage, reducing fees, fairness. And, at the highest level, what are the problems that we are trying to solve. As such, much of what we discuss will be of interest to a more general reader, who wants a realistic understanding of what is really at stake in current retirement policy debates.
Michael P. Barry is President of O3 Plan Advisory Services LLC, which provides retirement plan regulatory analysis targeted at plan sponsors and those who provide services to them. Before founding Plan Advisory Services in 1998, Mike was Managing Director at Bankers Trust and, before that, practiced law in Washington D.C. and New York. Mike writes a regular column for PLANSPONSOR Online "Barry's Pickings."
Part I: The Defined Benefit Plan Legacy 1
Chapter 1: An Overview of Existing Plans 3
Chapter 2: DB Plan Basics 7
A Formula Benefit 7
Where All the Risk Is Borne by the Sponsor 9
The Three Risks of Retirement Savings 9
Chapter 3: The DB Valuation Challenge 13
The Challenge 13
The Time Value of Money 14
Going ConcernThe Portfolio Rate of Return Option 17
Chapter 4: The Regulatory FrameworkBenefit Insurance, Minimum Funding
Rules and Accounting Standards Affecting DB Plan Finance 21
The Pension Benefit Guaranty Corporation 22
The Pension Protection Act of 2006 22
Plan A: Tighten the Minimum Funding Rules 23
Plan B: Relax Minimum Funding Standards and Increase PBGC Premiums 24
The Current Minimum Funding Regime 25
The Current PBGC Premium Regime 26
The Accounting Regime, Very Briefly 27
How DB Liabilities Are Valued for Financial Statement Purposes 28
Chapter 5: The Regulatory FrameworkMinimum Standards for Retirement Plan
Design and Tax Code Nondiscrimination Rules 31
Minimum Standards 31
Spousal Rightsthe Retirement Equity Act of 1984 33
Tax Code Nondiscrimination Rules 34
Tax Code Limits on Benefits, Contributions, and Compensation 34
Chapter 6: Problems with the DB Design 37
Issues with DB Design 37
The Inadequacy of Pre-Retirement Income as an Index of Post-Retirement
The Inadequacy of a Flat Retirement Income Target 39
The Significance of Post-Retirement Risk 39
The Inadequacy of a Benefit Design Based on a Full Career 40
The DB Benefit Is Significantly Backloaded 40
Significance for Corporate Culture 41
Chapter 7: The Cash Balance Plan Conversion Crisis 43
What Is a Cash Balance Plan? 43
Why a Cash Balance Plan? 45
Why Did These Plans Have a Surplus? 45
Why Does a Funding Surplus Matter? 46
Why Cash Balance Plans Solved This Problem 46
Cash Balance Plan Conversion = A Decrease in Benefits for Older
Massive Employee Pushback 49
Chapter 8: The Secular Decline in Interest Rates and the Viability of DB
What About the Other Two Sponsor RisksInvestment and Mortality? 54
A Fundamental Lack of Transparency 55
Chapter 9: Getting Out, Slowly 57
The Increased Cost of Plan Termination 57
Getting Out Without Getting OutThe Plan Freeze 58
Taming LiabilitiesLiability Driven Investments 58 The LDI Overlay 59 ...