Pension Reform


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AWF supports Defined Contribution Pensions as opposed to Defined Benefit Pensions.

Defined contribution pensions are pension plans that are portable and more “employee-friendly.”  These plans offer more autonomy for the employee to choose his or her investments.  They are predominately offered in the private sector.  Common examples of Defined Contribution Pensions include the SIMPLE IRA and the 401(k) plan.  Conversely, Defined Benefit Pensions are pension plans that do not have individual accounts, and in which the person is paid an amount at retirement that is based on his or her position, years worked, and the like.  Often, defined benefit pension plans are dominated by labor union-controlled boards.  While these plan administrators are under a legally-binding fiduciary obligation to maximize plan assets for workers, secondary considerations (e.g. unionization, social activism, etc.) can and have intruded on this basic worker security.  Workers, for their part, have little or no say in how their retirement nest egg is invested.

AWF supports Defined Contribution Pensions because they give the employee a higher degree of control over his own retirement.  Defined Contribution Pensions are more flexible and portable, while simultaneously allowing for workers to invest in the stock and bond markets. Workers control how much is deposited into their accounts (whether it is from employee salary deferral or from employer contributions).

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