US - Hybrid defined benefit (DB) plans could form part of the new investment landscape for US company retirement schemes, according to an analyst from Watson Wyatt.
Christine Tozzi, office practice leader for retirement consulting, for Watson Wyatt in San Francisco, said the US Pension Protection Act, has provided plan sponsors with more clarity on hybrid vehicles.
Tozzi said a hybrid plan had some features of a defined contribution (DC) plan and a DB scheme.
She said: “So, perhaps the formulas are defined as lump sums and sometimes they are created to look like a DC account that grows with interest but is actually a DB pension plan.”
Tozzi explained: “We already have seen more movement towards the hybrid plan.”
She added: “We also see these plans as being more efficient than a defined contribution approach. Hybrids tend to win with cost efficiency.”
Tozzi’s comments come after Global Pensions reported in July 2007 that a survey from Watson Wyatt noted fewer companies had closed their DB plans compared to 2006, and many were committed to keeping schemes open.
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