Illustrating Retirement Income for Defined Contribution Plan Participants: A Critical Analysis of the Department of Labor Proposal

2018 ◽  
Author(s):  
Mark Warshawsky
Keyword(s):  
Critical Analysis ◽  
Retirement Income ◽  
Defined Contribution ◽  
Department Of Labor ◽  
Defined Contribution Plan

The impact of employer-delayed deposits on plan participant wealth

2016 ◽  
Vol 42 (12) ◽  
pp. 1171-1179
Author(s):  
Jeffrey Scott Jones
Keyword(s):  
Design Methodology ◽  
Defined Contribution ◽  
Regulatory Oversight ◽  
Content Type ◽  
Defined Contribution Plans ◽  
Economic Significance ◽  
History Of ◽  
Defined Contribution Plan ◽  
The Impact ◽  
Primary Contribution

Purpose The purpose of this paper is to examine the impact of employer-delayed deposits to defined contribution plans on plan participant wealth. The history of regulatory oversight on the obligations of employers to remit deposits to defined contribution plans on behalf of employees is discussed. In light of these regulations, the paper discusses and examines situations in which employers may legally delay the deposit of employee contributions to a defined contribution plan and how the existence of various calendar anomalies may impact the returns of plan participants. Design/methodology/approach Simulated equity portfolios over the period 1985-2014 are created to determine the economic significance of possible delays in plan deposits on the accumulated wealth of plan participants. Findings The findings suggest that in situations where employees are paid monthly at the end of the month, it is always to their benefit to have their funds deposited as soon as possible. However, for employees paid weekly at the end of the week, a slight delay (one to three days) in the deposit of funds by the employer may actually be beneficial for the employee, particularly if the employee invests heavily in small and mid-cap stocks. Originality/value This is the first paper to explicitly study the impact of an employer’s timing of deposits to a defined contribution plan on the accumulated wealth of plan participants, and is thus the primary contribution of the paper.

scholarly journals New Dutch pension contracts and lessons for other countries

2018 ◽  
Vol 18 (3) ◽  
pp. 331-346 ◽  
Author(s):  
LANS BOVENBERG ◽  
THEO NIJMAN
Keyword(s):  
Financial Risk ◽  
Contract Design ◽  
Retirement Income ◽  
Financial Assets ◽  
Defined Benefit ◽  
Defined Contribution ◽  
Occupational Pensions ◽  
Systematic Risks ◽  
Recent Developments ◽  
Insurance Decisions

AbstractThis paper summarizes recent developments in Dutch occupational pensions of both the defined contribution and defined benefit (DB) types. A reform of DB schemes is discussed that introduces financial assets as individual entitlements. At the same time, the reformed schemes derive (dis)saving, financial risk management and insurance decisions from the explicit objective of adequate and stable lifelong retirement income. The proposed system also involves an insurance contract pooling longevity risks and possibly collective buffers that share systematic risks with future pension savers. The paper identifies the strengths and weaknesses of the Dutch contract design and draws lessons for other countries.

Required Minimum Distributions

2020 ◽  
Vol 52 (4) ◽  
pp. 127-137
Author(s):  
John G. Kilgour
Keyword(s):  
Life Expectancy ◽  
Internal Revenue Service ◽  
Retirement Income ◽  
Defined Contribution ◽  
Next Generation ◽  
Retirement Plans ◽  
Internal Revenue ◽  
Individual Requirement

Required minimum distributions (RMDs) are an important part of individual requirement accounts and defined-contribution retirement plans including 401(k), 403(b) and 457(b) plans. Such plans are intended to provide retirement income for the account owner and his or her spouse. They are not intended to pass untaxed wealth on to the next generation. RMDs do that by requiring that a portion of the balance in an account is distributed (and taxed) each year beginning by age 70½ (recently extended to age 72). This article examines the origins and extensions of RMDs, how they are calculated and how they work. It then assesses the recently enacted SECURE Act and the proposed updated Internal Revenue Service tables of the life-expectancy factors used to calculate the amount of the annual RMDs.

The Use of Utility Functions for Investment Channel Choice in Defined Contribution Retirement Funds. II: A Proposed System

2003 ◽  
Vol 9 (4) ◽  
pp. 903-958 ◽  
Author(s):  
R. J. Thomson
Keyword(s):  
Stochastic Model ◽  
Utility Function ◽  
Stochastic Models ◽  
Utility Functions ◽  
Retirement Income ◽  
Defined Contribution ◽  
Channel Choice ◽  
Retirement Funds

ABSTRACTIn this paper a system for recommending investment channel choices to members of defined contribution retirement funds is proposed. The system is interactive, using a member's answers to a series of questions to derive a utility function. The observed values are interpolated by means of appropriate formulae to produce a smooth utility function over the whole positive range of benefits at retirement. The resulting function, together with stochastic models of the returns on the available channels and of the annuity factor at exit, is then used to recommend an optimum apportionment of the member's investment. The proposed system is applied to the observed values of utility functions of post-retirement income elicited from members of retirement funds. Difficulties in the application are discussed and the results are analysed. The sensitivity of the recommendations to the parameters of the stochastic model is discussed.

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