AFF 604 Chapter Notes - Chapter 19: Employee Retirement Income Security Act, Defined Contribution Plan, Cash Balance Plan
Document Summary
Policy makers and financial planners refer to financial security for retirement as a three-legged school: payments from the government, individual"s own personal savings and pension payments from employers. Many believe that public pension plans are underfunded and that private pension plans have shifted significant amounts of risk of sufficient retirement funding onto employees. Pension plans are classified based on their sponsor. Public pension plans for any government employee (public school teachers, policy officers, judges) Private pension plans sponsored by private companies, administered by the company. In u. s. : private pensions regulated by the employee retirement income security act of 1974 (erisa) but governance of union pensions regulated by taft-hartley act of 1974. Defined benefit plan: employer promises to pay an employee a set of retirement income based on factors such as the employee"s salary and years of service with the employer. Employer sets aside sufficient funds to pay those future benefits.
