Improving Defined Benefit Pension Security

The retirement security of 44 million workers and retirees depends on adequate funding of private-sector defined benefit pension plans. In considering reforms, Congress must balance the need to reduce chronic underfunding against the potential impact of large funding demands on plan sponsors’ financial condition and willingness to maintain plans. Congress can better minimize funding volatility so that required funding increases from year to year remain on a reasonably smooth path, and should require improved and more timely disclosure. However, to promote pension coverage and protect workers’ reasonable expectations, restricting benefits or benefit improvements or curtailing government-provided pension insurance should be a last resort.