Going, Going, Gone!

As a lifelong Mets fan, I wish that the title of this article was referring to the heroics of Mets rookie first baseman Pete Alonso, but unfortunately, I am writing today about the continuing demise of defined benefit plans in the private sector.  Clearly, companies have been moving away from offering pension plans for years, but the pace has certainly accelerated and is now rivaling Usain Bolt in his heyday.

According to an article that appeared in the Greater Baton Rouge Business Report, only 81 companies within the Fortune 500 were still sponsoring a plan as of 2017. There were 288 as recently as 1998. Coinciding with this move is the greater use of pension risk transfer strategies, which has seen a 143% increase from 203 plans in 2012 to 493 in 2018.

Placing the burden on employees to fund, manage, and then disburse a retirement benefit is just not good policy. Many Americans are not comfortable with having this responsibility and furthermore don’t have the disposable income to put enough into an account to build the necessary nest egg for a successful retirement.

 

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