Benefits Canada, August 15, 2008

This article reports that defined benefit (DB) plan sponsors looking to save money by switching to defined contribution (DC) plans take note: despite commonly held beliefs, DB plans are capable of delivering retirement benefits at a lower cost than DC plans.

The National Institute on Retirement Security’s (NIRS) report, A Better Bang for the Buck: The Economic Efficiencies of Defined Benefit Pension Plans, found that it required 12.5% of contributions per year to pay for a simulated DB plan versus 23% of contributions for a simulated DC plan.  Read the full article here.