The Future Security of Workers’ Pensions

Abstract

The law governing the funding of private-sector defined benefit pension plans is in need of both long-term reform and short-term adjustment. After replacing the obsolete 30-year Treasury bond as the basis for the statutory discount rate used to measure plan liabilities, Congress should turn to more comprehensive and permanent reforms. The requirement that employers accelerate their contributions to underfunded plans must be made more timely and less volatile, and exceptions currently permitting inappropriate funding holidays for underfunded plans must be eliminated. Congress can protect the security of workers’ pensions by providing for adequate funding, without discouraging employers from continuing to sponsor employer-funded plans.