U.S. Corporate DB Pension Plans—Today’s Challenges

Abstract

This article analyzes the multiple considerations facing a corporate sponsor making decisions about its defined benefit pension plan. First, the authors examine why so many plans have closed and/or shifted to more conservative asset-liability allocations. Second, they discuss the challenging balancing act for underfunded plans when making their asset class allocation, duration-matching, and contribution choices, as well as the risks and costs associated with each choice.