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Accession #: 221105

 

Publication Date:
September 22, 2021
Title:
Insight Statement – Protecting Pensioners of Traditional Defined Benefit Plans: A New Approach to Solvency Funding and Benefit Reductions on Plan Wind-up
Other Details:
27 pages.
Author:
Serge Charbonneau, FCIA, and Joseph Nunes, FCIA
Description:
The current system for winding up underfunded defined benefit (DB) pension plans involves dividing the segregated pension fund among all plan beneficiaries on a pro-rata basis according to the value of their pension entitlement. This means that if the available funds represent, for example, only 90% of the value of the collective promises, then each beneficiary sees a 10% reduction in their pension. This begs the question: Is there is a better approach to addressing underfunded pension plans?

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