A company may terminate an employee benefit plan. However, a plan qualified for favorable tax treatment under the Internal Revenue Code must provide that, in effect, each affected participant becomes fully vested in his accrued benefit at the time of termination. ERISA also provides that, for defined benefit plans, the Pension Benefit Guaranty Corporation (PBGC) must be notified. (more…)

Once the cash flows to be financed are determined, whether via a detailed version of the determination of planned expenditures or the simpler “rule of thumb approach,” the question of how each $1 of assets will be turned into an income flow must be addressed. How much income will each dollar generate, and for how long? This is the basic issue of longevity risk (the risk that a person will live either beyond, or not until, their “life expectancy”). This source of uncertainty presents perhaps the most significant challenge for cash flow planning in retirement. (more…)

Having decided that a corporation can afford and should offer some type of employee benefits plan, the next step is to determine what type of plan or plans the company should adopt.

Employee benefit plans that provide some form of deferred benefits (that is, benefits deferred until after the employee retires) fall into two broad categories. A defined contribution pension plans provides an individual account for each participant and benefits are based upon the amount contributed by the company, or by the company and the employee, to that account, together with the investment results of the account. (more…)

Virtually all industrialized countries have enacted legislation prohibiting discrimination in employment or occupation on the basis of race, religion, sex and various other grounds. Very few have laws banning age discrimination.

Among those that do, the United States has the best-established legislation. Age discrimination laws have been adopted at the federal level and by most states. The principal federal legislation is the (more…)