US - Congress must take the opportunity presented by the pension reform Bill to better protect traditional pensions, according to Watson Wyatt.
The bill is at “a critical point” in Congress and lawmakers need to rework the current pension laws to help companies continue to sponsor such plans, said Sylvester Schieber, director of US benefits.
“If it fails to take advantage of that opportunity, both employers and employees will suffer,” he said.
“As Congress considers pension reform, it should be careful not to pass laws that would make it even harder for companies to maintain their traditional pensions.” Schieber added that employers were struggling with retirement decisions, largely due to “decades of legal and regulatory uncertainty”.
The consultants also warned employers that shifting from DB to DC schemes like 410(k) plans had potential ramification”, and could see them struggle to retain staff.
“Many employees are not taking advantage of their 401(k) plans or saving enough, and their retirement pay outs will be heavily influenced by the state of financial markets,” the company said.
The consultant warned many employees would be unable to retire when they or their employer wanted them to, which would create workforce management issues that were avoidable with traditional DB plans.
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