These days, many plan sponsors are looking to exit the defined
benefit (DB) world – largely for the following
reasons:
- they want to cut benefit funding and administration costs, as
market volatility and low interest rates drive up solvency deficits
and make planning more difficult;
- to achieve better planning and budgeting by making pension
liabilities more predictable for purposes of financial
reporting;
- changes in the accounting rules;
- to reduce regulatory complexity and limit the risks associated
with their current DB plans; and
- to align local business decisions with those of international
affiliates or parent corporations.
There are a host of options available to plan sponsors who are
contemplating exiting their existing DB arrangements; however, when
weighing these options, sponsors will have to pay mind to the many
hurdles they may face when restructuring, namely, collective
bargaining agreements, plan terms, pension standards legislation,
and
