Financial News/Dow Jones, August 15, 2008
Stephanie Baum reports on a new NIRS report that finds defined contribution schemes such as 401-K plans are more expensive for employers to implement even as companies shift toward them and away from defined benefit schemes.
The study concludes that the cost for employers to fund the target retirement benefit using a defined benefit plan is 12.5% of the annual payroll compared with 22.9% of the payroll with a defined contribution plan.
According to the article, NIRS is “calling for employers to embrace defined benefit plans as part of their retirement. Defined benefit plans are pre-funded by employers in the private sector and in the public sectors, employees contribute as well. Defined contribution plans put more responsibility on employees to manage investments.”
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