The Financial Conduct Authority backs up these fears and the watchdog estimates only 47% of transfers out of defined-benefit pensions
can be deemed suitable for the individual.
General Motors took a more drastic approach to managing the risks involved in defined-benefit pensions
when it announced recently that it will offer lump-sum buyouts to salaried retirees and transfer the management of its active pension plans for salaried retirees to Prudential Financial.
"Many companies, large and small, have active or closed defined-benefit pension
schemes," said Charles Tilley, CIMA's chief executive.
plans not only offer more retirement security via a guaranteed monthly check, they often allow you to purchase service credit, in case you move from one retirement system to another during your career.
Legislative Reactions to Underfunded Defined-Benefit Pension
Some operating cost-control strategies--again benefiting from the niche music focus--include: extensive use of contracted services in non-mission centered areas including dining, auxiliary, and facility services; a reasonable (for music instruction) 15-17 hour/week faculty workload; diligent and vertical use of expensive Boston real estate space (about 600,000 square feet for 3,700 students); partial use of a defined-benefit pension
approach; extensive use of student employees in many educational facilities, and a creative approach to the use of part-time faculty that provides for health and pension benefits to many teaching higher loads.
Over the last few years, the total underfunding in the defined-benefit pension
system has deteriorated to the point where the Pension Benefit Guaranty Corporation (PBGC), the federal agency responsible for protecting private sector defined benefit plan benefits, estimates that total plan underfunding grew to more than $400 billion as of December 31, 2002, and still exceeded $350 billion as of September 4, 2003.
One of the most important issues facing the pension world today involves companies replacing their traditional, defined-benefit pension
plans with cash-balance plans.