What i s the Pensi n As one expert Mr. Chairm Devel ot the em opm o ent p n L an and m los y has put i a ee co n ndscape T the ret net i m rib t, m i bru ers of the Com em to es). W ovem day? ent pl ent e an m re th from aat wo m rket “gol ittee, it is repres rk den er to handcuffs” t ent a pl stay fo a response t easure t r a fu oo an em appear before y ll career (a lo o work-force pat ployee/w p emou t pl ro oy tb eoday a rns. There i er cont bility), th to di ract scuss e b of s now a enefit beneficiaries, by the purchase of insurance or annuity contracts or otherwise, retirement benefits, and includes any deferred profit-sharing plan large body of literature that uses govern ret partnership, personal account irem ent Congress acted in 1983 to change val securi ue/account ty and defi balaned benefi nce woul ability, and self reliance m d grow t t pensi ment data to show that the workfor the pension system on pl o a le ans. vel am I am oved the nation ount Dallas Salisb i for federal civ ng to a meani away from ury, Presid ce has always had high turnover and that ngful ilian em cont traditional defined benefit, enployees. Prior to 1984, the t an ribut d CEO o ion to ret f th irem e Em ent p securi loyee ty. ii which provides benefits at or near retirement.” (emphasis added) H.R. 2 was closer to the traditional dictionary definition of a pension: “a onl Benefit Research Institute. EBRI has few have spent emp yl federal oyer-p We ay-all p ret re t 25 y ih rem e worker t lan ent ears or m s with plan was a fi o th lo eave aft re wi eir fotcu na he one em been undertaking research and educati s o lr a few y pay n en defi pl cooy ears of em u ned benefi rer. Not aging an pl t em onl pl oyan. For t p m yl i o es nt y t ee to , ei hist t hose hi h rem rer a defi ue of t ain on on em red aft h with e pri ned benefi a sin e vr t ployee benefit issues since its ath e sect e 1983 act glte em pl or, but an or a defi plo, a new reduced y i er u t has been so nned til ”normal retirement or disability allowance” (emphasis added). foundi defined benefit plan was accom iii for t retirem he publ ng i ent age,” and toward greater financial and psychol cont n 1978. EB icri sect butor as wel ion pl Ran woul I does not l. Defi p d provi anied by l ned cont obby de a sm for or agai a generous 401(k)-type plan. Thos ribut al ion pl l lunst mans and i p speci -sum ogi di fi cal c proposal ndi st i ri ndependence, and i vi but dual ion t account s, i hat nst le already working had the option of i ead our m kel defi y woul d ned benefi ent id be spent ssi ificat on i ion wi s t pl toans provi provi . th thde dat e servi de a ace that See Craig Copeland and Jack VanDerhei, “Personal Account Retirement Plans: An Analysis of the Survey of Consumer Finances,” EBRI Issue ix rem will assist o career-average benefi firma versus t 10. ining i Large em n th h ters in e em he olployers that had defined benefit plans in 1974, and are still in business, in m pl d pl assessin oy t, as not an or shi er. g tren ed above, fting t ds an o t dwhi h in e new pl m ch m akin ay g ans. C serve t policy d ongress had al o del ecisio iver m ns. oso act re to m ed i ost n workers (due t 1978 to add to w o st cases still have o new sect relatively short ions t o Brief no. 223 (July 2000). iv Jerry S. Rosenbloom and G. Victor Hallman, Employee Benefit Planning, third edition, Prentice-Hall, 1991. the Internal Revenue Code, 125 and 401(k) service), t t Pl h hem an desi an t . The desi radign and recrui tionalgn changes t defined benefi tmento act ltu pl im on has m p ans. For t . Proposed regulations in 1981 eventua sums and cash ba oved he em from pl oy broa laer, t nce have al d-based at hey provi lo tr de a m wed t action t h lly led to a m o em re cert o key to com em ain cost pl pet oy assive transition of e wi ee at , whi tht defi c ract h can be ined on; from v See Emily S. Andrews, Pension Policy and Small Employers: At What Price Coverage?, EBRI-ERF, 1989, chapter IV for a summary of t del m radi oire easi vtery ional of fast cont l profi y budget ribut vest t-shari ion pl eed m d. A growi ng pl ans for worker underst atcans i hes i ng num n nt short o 401(k) pl ber of al -term savi ans, whi alndi pl ngs pr ans provi ng and appreci ch m ogram eant de l s t tu h om at vest at t p ion. Proposal -sum he em ed m di pl ast toy cri hes for l ee coul buts such as al ions, whi d cont ong-tc eri h are m rm lbut owi savi e pre-t ng pre-t ngs program ore popul ax dol ax worker l ar wi ars s; th Since my full submission will be included in the hearing record, I will provide a brief summary of points research; Richard A. Ippolito, Pensions, Economics and Public Policy, Pension Research Council, 1986; and Richard A. Ippolito, Pension Plans assum from workers. They delivery of final pay annuities to ing t cont he em ribut are port pl ions t oyer i a on bl defi corporat e, and once a l ned benefi ed a 401(k) feat long-term t pl um ans woul p-sum workers to sm ure i di d furt stn ri t but h her er ei ion i r profi aller accum ase the differences between the plan types, and m s ta t shari ken upon job t ng pl ulaan. St tions for all workers and a focus on erm atie and l nation t ocal hey governm eliminate e any nts, and ight and Employee Performance Evidence, for your consideration: Analysis, and Policy, The University of Chicago Press, 1997 x vi non-profi l em um pl poy -sum er-speci ltead t di organi stri ofi an i but c ri zat ions, n isks. Dat ons, had t crease i , and from n a from t hh is e sponsorshi ty em t pe of opport he Pensi ployers, uni p on B of defi uni eons and pl nefi ty i ned bene n t Guarant 457 and 403(b) pl ans deal fity pl Cans. W oirporat ng wi ans. Legi ite on underl hre benefi long-te sl rm itat n s pai e t i ri on si h sks, t d e num ince 1986 has m n l ou avoi ber of workers for mp-sum ding l form ong t oved al , erm l See Charles G. Tharp, “Yes,” in Dallas L. Salisbury, ed, Do Employers/Employees Still Need Employee Benefits?, EBRI-ERF, 1998, pp 11–13 1. Since I joined the U.S. Department of Labor in 1975 to assist in the implementation of the Employee vii T – 136 Robert B. Peters, Defined Benefit and Defined Contribution Plans: A Corporate Perspective, in Dallas L. Salisbury, ed., Economic Survival in t risk wh hese so-cal os (in m th vis is a co however, t estm led “sal ent, in nsary h id flatio is eratio woul -reduct n,n m d l . io on” pl irtality) an kely have no favorabl ans cl doser t placin oget g th heir b e er i im nu pact desi rden o gn and rul o n retirem n indivien e ds, wi ut secu als an th nearl rity ( d fam once the worker retires) yilies. all employers now able to Retirement Income Security Act of 1974 (ERISA), defined benefit pension plans have changed a great deal. Retirement: Which Pension is for You?, EBRI-ERF, 1982, pp 81– 86. establish 401(k) plans. Recent years have seen debates rel Ma ajor em tive topl a defi oyers and uni ned contri ons have al bution plan. ways provi in a num ded the pe ber of states over proposals to either introduce nsion coverage available today. Over 95 percent viii 2. Then, nearly all paid benefits in the form of annuities for most individuals when they reached normal See Daniel M. Holland, Private Pension Funds: Projected Growth, National Bureau of Economic Research, 1966; Private Pensions and the Can We Return to ‘The Way We Were’? expanded supplem of part 11i.c iM pant y fat s are i her’s defi ental “salary reduction” pl n large em ned benefi ployer set t pens tings. M ion pl ans, or to replace defined benefit plan an began pay ost large emipl ng hi oyers wi m a m th ont 401(k) pl hly annui s with defined cont ans now use em ty in 1978. Today ploy ribution plans. er st , that ock i check n Public Interest retirem , American Enterprise Institute, 1970; and No ent age. Essentially all of the natio rman B. Ture with Barbara A. Fields, n’s largest employers had a defi The Fu ned benefi ture of Privatt pl e Pen an and a t sion Plans h, rift- Writing prior to the enactment of ERISA, one leading actuary noted: “A defined benefit final-pay pension Dem the pl ographic change, and econom ans; represents a very im some of the largestportant contribu unions have negot ic competition, m tion to m iated st akes it lik yock ownershi parents’ retirem ely that these debates, and trends, will continue. p, or out ent secur right ity. W employ hy? ee ownershi Largely because he and p. As one American Enterprise Institute, 1976, and Dallas L. Salisbury and Nora Super Jones, eds, Pension Funding and Taxation: Implications for saving or profit-sharing plan, and multi-employer trusts and public em ployers had defined benefit plans. plan may be selected precisely because it is the only type of plan which permits the employer to design a pension Tomorrow, EBRI-ERF, 1994: and Dallas L. Salisbury, ed, When Workers Call the Shots: Can They Achieve Retirement Security, EBRI-ERF, senior execut m The fol y m ivo e put tlh oer have l wi i ng t t ina 1998: bl iv e present ed y “em ears l pl s dat oy onger t ee ownershi a from han t thh e U.S. Depart ey p al pllanned ows thor expect e corporat ment of Labor on pri ed t ion t o, and t o builh dey v part at have spent e em nershi ploy p and a hi er pensi all the m on pl gh oney ans i n 3. Today, largely as a result of decisions made by government, defined benefit pension plans pay more formula that takes both sources of retirement income – Social Security and company benefits – into account. By xi 1995. term perform s of num ance work culture.” they saved. The great ber of plans. The trend lines are clear: de As one executive notes: est virtue of an annuity is fi t ned benefi his protect ti pl on agai ans are on t nst unexpect he decl ed l ine and sal ongevity a. That ry reduct is t ion he Statement before the ix individuals lump-sum distributions than annuities, supplemented by defined contribution plans to which the See Charles G. Tharp, “Yes,” in Dallas L. Salisbury, ed, Do Employers/Employees Still Need Employee Benefits ?, EBRI-ERF, 1998, pp 11— doing so, a firm can provide higher paid employees a proportionately greater company pension. This compensates plans are b “W only true form eco him le i in ng com the p e of retirem securi rimary “p ty ient incom sen an i siossue, i n” pe lan t security: a check that does not stop un is in s in th creasi e natio ngln y. bei Th ng recogni e numbers o zed t n m hat ulti-em l til one dies. It is no longer the ong-t pe lo rm yer p securi lans rein ty can best force th be e vii 13. employer contributes. Many of the largest new-economy employers that never had a defined benefit plan, for the fact that these individuals receive a lower percentage of final earnings from Social Security.” ERISA and iii, iv x Committee on Ways and Means achi trend l eved t ine of i case t hrough personal nh creasi at allng use of suppl defined benefi developm tem pl ent ent an ret and professi al and pri irees choose t monal ary defi growt o be ned cont pai h. Ironi d inri annui but calilon program yt, t y form he presence of hi , and few defi s. Final gh-cost ned cont ly, th ‘1950’s, one e dat ribut a hi ion de Steven G. Vernon, Employee Benefits: Valuation, Analysis and Strategies, John Wiley & Sons, Inc., 1993. and are now among our largest employers, rely exclusively on defined contribution plans. Most multi- subsequent xi legislation has limited the degree to which a plan sponsor can integrate a pension plan with Social See Charles G. Tharp, “Yes”, in Dallas L. Salisbury, ed, Do Employers/Employees Still Need Employee Benefits ?, EBRI-ERF, 1998, pp 11–13. size-fits-all b the use of l part um ien cp ip efits’ m -sum ants di do so. Fut st ay, in ribut fact, b ions i ure ret ne a p defi irem rned benefi ecu ent rso securi r to j t pl o ty bans. shoul insecurity as cost-cutting m d no longer be based on a deba easures m tea about y be necessary for an defined benefit employer trusts and public employers sponsor both defined benefit and defined contribution plans. Security (how much defined benefit can be offset), and funding and benefit limits have shifted much of what is done Subcommittee on Oversight i organization to carry this heavy burden.” or defined contribution, as that is And, he continues: “There is a no longer the central issue when bot general question of whose responsibility it h plan types paying lump-sum 4. Data from the Federal Reserve Survey of Consumer Finance documents the trend toward plan change. Of for high-income workers outside the qualified plan. i Number of Qual s to provi di de ret stribut iri em ions at fieent d Pri i job change and ret ncom vate Pensi e. There i on Pl s ians 1975-2002 n ircreasi ement ng em . The fut phasi ure debat s today on t e mu hst e not be about ion th at worker educat it is up to indi ion on savi viduals tongs, all families reporting at least one worker with some type of pension coverage, the portion of those families He continued: “Such a plan m United States House of Representatives ay also be necessary to reward an employee whose salary has increased provide a great investier port ng, longevi ion of t ty, ret heir own ret iree healitrh em , long-t ent securi erm care, a ty.” nd what choices individuals can make to avoid running Year Single-Employer Single-Employer Multi-employer Multi-employer with at least one worker participating in a defined contribution plan only was 57% in 1998, compared with rapidly or whose service was relatively short. Additionally, only a pension can reward past as well as future service For the decades ahead such views out of money before they die. are likely to dominate pension decision-making. Many of these views Defined Benefit Defined Contribution Defined Benefit Defined Contribution 38% in 1992, while families with at least one worker participating declined from 40% to 21% between and base the total benefit on final average pay. Finally, some companies believe that they are better able to assume are now ent ering the debate over the future of Social Security --- proposals by both the 2000 Republican and 1975 101,214 207,437 2,132 311 1992 and 1998, while workers with both stayed steady at 22% in both 1992 and 1998. The best available investment risk…” Taking these in order, new funding and liability rules tied to plan termination insurance have all Democrat candidates for President fo Introduction r voluntary government sponsored individual accounts to supplement today’s 1985 167,911 461,158 2,261 805 estimates suggest that the vast majority of defined benefit plan participants who leave an employer with but ended the consideration of past service due to the liabilities it creates, and the difficulties the new funding limits Social Security---and m A review of the st any of the sam ate of defined benefi e pressures and attitudes reviewed here can t pensions must begin with a clear underst be found in that debate. In short, anding of what a 1998 54,699 672,297 1,706 1,329 less than 10 years of service take a lump-sum distribution; that over half of all defined benefit plans now place of setting aside funding. Employers and unions that believe they can better absorb risk have continued defined Hearing ”pension plan” is. W whatever one would lih kile this sounds sim e the pension worlp d t le, it is done o be from a norm because the “legal” m ative perspective, t eaning his descri has clearly changed over the ptive review suggests that 2002 est. 36,000 700,000 1,800 1,500 offer a lump-sum distribution at retirement; and that nearly all of the over 500 individual account defined benefit plans, or moved to hybrid plans like the cash balance plan, rather than moving totally to defined contribution. ii on it will look m past 28 years.o Today, the term re like the pension world of the 1990s that is used to describe any em that of the 1950s. The i ployer or government-sponsored capital accum ndividual will be king, and ulation benefit plans (“cash-balance” plans) offer lump-sum distributions. The combination of the PBGC and tax-funding limits, however, make it unlikely that new defined benefit pension Sources: U.S. Department of Labor and author estimates. Retirement Security and Defined Benefit Pension Plans econom programic well being once one is no longe that has a stated purpose of provir working will increasingly rest on wh ding funds for retirement. Defined benefi at saving and cons t, defined contri um but ption choices ion, annuity 5. I note this trend toward defined benefit plans paying lump-sum distributions because it fundamentally plans will be formed by either single employers or multi-employer groups. Whether this is good or bad, right or the individual m payment or lump a-sum de throughout distribution form his or her life. “Choose to Save” is taking on new m , all are within the new definition. eaning, as it will determine As the number of plans has changed, so have the numbers of participants. Data from the Federal Reserve affects the way in which a defined benefit plan contributes to retirement security, yet too many articles and wrong, matters little in light of the overwhelming public policies that make it so. iii whether iER ndiISA expansi viduals can ret on of t ire, or m he defi ust ni work forever. tion of pension plan to include capital accumulation plans with lump-sum Survey of Consumer Finance document this trend through 1998. Considering all families reporting at least one analyses still assume/suggest that all defined benefit plans pay annuities upon retirement, thus shielding The actuary concluded: “The corporate viewpoint on the defined benefit versus defined contribution issue distributiOnce a worker retires, a retirem ons at “termination of covered em ent plsecuri oymetnt y debat ,” as opposed t e over defi o “at ned benef or near ret it versus defi irement,” act ned cont uallyri serves t bution pl o ans worker with some type of pension coverage, the number of those families with at least one worker participating in a retirees from the need to make investment, longevity, rate of spending, and other decisions required of is formed by various competing factors: (1) whether its financial position can sustain the economic uncertainties wo clearl uld y o hi nghl ly b ight e relev the “St ant to atd e of Pensi ay if one p ons” i lan typ n th e p e Uni aid o ten d St ly an ates. B nuities an oth td h th e publ e oth icer o and pri nly lu vat me sect p-sum or have m distributio oved ns. As in the defined contribution plan only was 57% in 1998, compared with 38% in 1992, while the portion of families with at those who are paid lump-sum distributions. The year 2002 finds far less difference between the amount of posed by a defined benefit plan; (2) the extent to which competitive factors determine benefit levels and types; and Testimony of long as both plan types pay lum direction of sponsoring fewer plp ans t -sum hat di onl stributions to all who have achieved sm y pay benefits “at or near retirement all accruals, and as long as both plan ”, and have created more and least one worker participating in defined benefit plans declined from 40% to 21%, while workers with both stayed retirement security provided by the defined benefit and defined contribution plan systems than existed in (3) the corporation’s perception of its responsibility to provide for employees’ retirement and other financial needs.” t m yo pes i re pl nans whi creasingl ch pay y pay at lu “t mp erm -sum inat di ion of covered em stributions at retir pl em oyent (retirees generally select a lum ment”. The result has been dramat pi-sum c changes i when given a n defined steady at 22%. 1974. Fewer employers are willing to assume that they can financially sustain a plan as they may well be taken over or Dallas L. Salisbury choi benefit pension plans -- those that pr ce), the argument that one provides a great omise a fixed accrual and a determ er promise of retirement securi inablet benefit without worker investm y than the other, when both pay l ent ump- 1 6. Public policy change joined with demographics and economics to bring these two plan types closer spun off tomorrow; the new economy employer creates constant pressure to change benefit programs by turning new President and CEO, Employee Benefit Research Institute Employer preferences for pensions now focus more on economic performance than retirement income security. risk – including the developm sums, cannot be sustained. ent of defined benefit individual account plans (“cash-balance” plans) and growth in together. The primary difference between defined benefit and defined contribution plans to this day is the hire and retention competition to current cash and short-term incentives, not a great pension 25 years hence; and Pensions are viewed favorably if they serve to: the number of defi My father’s defi ned cont ned benefi ribution pl t pensi ans – t on pl hose t an began pay hat promisi e pay ng him ment a m of funds cont onthly annuiri ty but ined (once t 1978. Today he em , tpl hat oy check ee is fact that private employers make the funding contributions to defined benefit plans, and in the event of iv increasingly employers view their primary obligation to be survival so that they can provide work, leaving post- Washington, DC • Improve corporate efficiency. vest represents a very im ed), adjusted for i portant contributi nvestment earnings, but on to my prom parents’ retirem ise no fixed benefi ent security. t, as th W e worker hol hy? Largely because he and m ds investment risk. y adverse investment performance must contribute more in order to pay the promised accrued benefit, while work planning to the individual. Many employers and unions will view this last statement as overly harsh, but I • Enhance morale. mother have l I do not ived y provi ears l de a norm onger th aan t tive assessm hey planned or expect ent of whether t ed t ho ese t , and t rends are good or bad for em hey have spent all the money ploy th ers, uni ey saved. The ons, both employers and workers generally contribute to private defined contribution plans, and the worker view it increasingly as the reality. Because of these factors, defined benefit pensions are inherently problematic in June 20, 2002 • Keep channels for promotion open. i great ndivi est dual vis rt , or publ ue of an annui ic polic ty y i . They s this prot are what ection agai they are. nst unexpected longevity. That is the only true form of retirement alone bears the burden, or gains the fruits, of bad or good investment performance. this new world, as the sponsor issues relate to regulation, funding and liability, not to the simpler issue of portability. • Facilitate work- force reduction. incom e security: a check that does not 1996 data from the U.S. Bureau of t stop until one dies. It is no longer th he Census combined all plan tye case that all defined benefit plan pes under the single heading of 7. The federal government was one of the first major employers to drastically reduce the generosity of its What have changed are the regulatory environment, the workforce, world economics, technology, and “pensi retirees choose t • on,” as do t Enhance em o be pai he dat ploy a d from i ee i n annui d t ent he Federal it fy icat form ion wi , and few defi Re tserve. The dat h profit. ned cont a show t ributi hon part e impact ici of a m pants do so. Fut aturing pensi ure ret on sy irem stem ent , wi th defined benefit pension plan, while adding a defined contribution plan (1984), but many others in both the feelings of employer and worker security. Taken together, they suggest that we will not return to the defined benefit t securi he di • vergence of net ty shoul Offer a m d no l oonger be a debat st cost-effective and least adm flows and net cont e about ribut defi ions. Net ned benefi inistratively intense form flow t or defi s are a m ned cont easure of new cont ri of capital accum bution, as tri hat but is iu no l ons, pl lation. onger t us allh i e cent nvestr m al e nt public and private sectors have followed suit. The primary reasons it was done: a desire to reduce cost and design dominance of yesterday, regardless of the consequences for individual retiree economic security, and not v earni issue i ngs, l n an age when bot ess benefit pay h pl ment an t s. Net ypes pay cont ing l ribut uim ons are a m p-sum disteasure of benefi ributions at job change and ret t payments less new cont irement. The fut ributions. The ure debate • Attract and hold capable employees. future funding liabilities; a desire to reduce the golden handcuffs that make it difficult for a worker to even to the dominance of annuity payouts. fact that net contributions are nega must be about worker education on savi tive, while net flows are positive, under ngs, investing, longevity, retiree heal lines the prim th, long-term ary virtue of advance care, and what choices change jobs; a desire to allow greater fund accumulation for shorter service workers; a desire to provide a viii i fundi ndiving, com duals can m pound i ake t nto e avoi rest, and i d runni nvest ng out ment of m earni oney ngs. before they die. How 25 Years Has Changed Demands/Motivations A senior corporate executive noted in 1998 that “not having benefits at some threshold level will program that workers would better understand and be more likely to appreciate. The government does influence action, and ERISA changed design drivers. The law went from no vesting repulse employees, but the mere presence of a more generous benefits package will not attract and retain 8. Rules and regulations related to defined benefit plans are extensive and complex, as is the administration of vi For the individual worker, the move to more lump-sum distributions from defined benefit and defined minimum standard to immediate vesting in some cases; from asset use in a plan for building the firm to arms-length employees.” This view is explanatory of the movement in recent years to flexibility, and an effort to the plans, as indicated by the recent Department of Labor report. That report underlined the shift of plans cont transactions; from ribution plans suggest clear ”capital accum s a number of needs: ulation” versus ”retir ement plan” distinctions, to limited distinctions; from respond to environmental factors with program design. This includes: to the payment of lump-sum distributions, and the complexity of making the benefit payment calculations. i See Craig Copeland and Jack VanDerhei, Personal Account Retirement Plans: An Analysis of the Survey of Consumer Finances, EBRI Issue select 1 ive provi • A n sion of l eed fou r b mp asic fin -sums al anl cial literacy ed owed to the ‘al ulcatio or none’ requi n. rement; from less government tax revenue from • Respond to favorable tax laws that provide an incentive to provide a pension program. The worker tradeoff for this complexity, and the potential for errors, is that the employer typically makes EBRI is a private, nonprofit, nonpartisan public policy research organization based in Washington, DC. Brief No. 223 (July 2000). lump sums to greater government tax revenue from lump sums; from a retirement income focus to a cash portability ii • A need for understanding saving represents a tradeoff in lifestyle today in order to have money to live • R all co espond t ntribo u dem tionsa to nds i the p n lla an bor negot and the p iatarticip ions. ant is protected (up to the PBGC guaranty limit) against The E Founded i mployee Retir n 1978, i ement In ts com mi essi Secur on i ity s Act of 1974 ( to contribut Ee t RISA) o, t states: o encourage, and to enhance the development of sound focus; from a regulatory and tax incentive bias toward defined benefit plans to a strong regulatory and tax incentive on tomorrow. “any plan, fund, or program which was heretofore or is hereafter established or maintained by an employer or by an employee organization, or • R investm espond t ent “losses” as well as an entire array o social and indirect government pressures. of potential deviations from actuarial assumptions. employee benefit programs and sound public policy through objective research and education. EBRI does not bi by both, to the extent that by its express term as toward defined contribution plans; s or as a from result of surrounding circum a clear emphasis on em stances, ploy such plan, fund, or program er/union provision advant ---“(Aages t ) provides o an • A need for understanding investing, fees, returns net of fees, etc. 9. Defined benefit plans (with the exception of a few contributory plans) are full participation plans, as • Respond to inherent advantages of group purchase/provision. lobby and does not take positions on legislative proposals. retirement income to employees, or results in a deferral of income by employees for periods extending to the termination of covered increased focus on individual self determination and “retail delivery”; from a paternalistic assessment basis of social • A need for evaluation of how important the job-related benefits are, and the degree to which they may workers do not make a choice on whether or not to participate. For workers that may not be inclined to • Respond to shareholder desires and competition. employment or beyond, regardless of the method of calculating the contributions made to the plan, the method of calculating the benefits under obligation and corporate identification to one of maximum satisfaction of the largest number of workers. contri de but term e tin o a 401(k) pl e happiness fo an (part r a lifetim icularl e. y the lowest paid workers), this may make a defined benefit plan the plan or the method of distributing benefits from the plan” (emphasis added). This represented an expansion in concept from the first full version of the legislative pr preferable to a 401(k) pl oposal, H.R. 2,an (al which lim though som ited plans to those which “for e 401(k) plans m the pur ay provi pose of pr de nonel oviding for ectiv its par e cont ticipa ribut nts or ions whet their her or