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Published byJordan Marsh Modified over 9 years ago
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Contribution Rates and Benefits of the U.S. Pension System International Pension Conference FIAP and the Chilean Pension Funds Administrations Association
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Structure of Contribution Rates Limitations: Defined Contribution Plans –Pre-tax contribution limit: $10,500 –Annual Allocation Limit: $35,000 or 25% of compensation
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Structure of Contribution Rates Limitations: Defined Benefit Plans –Maximum total annual accrued benefit - $140,000 –Minimum funding rules: Normal cost + unfunded past service liabilities + investment gains/losses + changes to actuarial assumptions + other items
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Structure of Contribution Rates Other Limitations: –Compensation limit –Nondiscrimination rules –Top-Heavy rules
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Structure of Contribution Rates: Trends in Contributions ($ Billion)
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Structure of Contribution Rates Current and Future Issues: –Inadequate Savings –Retirement Savings Legislation –Pension Fund Surpluses
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Benefits Granted Defined Benefit Plans –Form of Payment: Life Annuity with Spousal Benefit –Benefit Formula Based On Dollar Amount (23%) Earnings (67%) Cash Account (6%) Percent of Contributions (3%)
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Benefits Granted Defined Contribution Plans: –90% pay benefits in a single sum (“lump sum”) –Less than 30% provide an annuity –40% offer benefits in fixed installments
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Benefits Granted: Amounts Distributed, 1977-1996 ($ Billion)
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Benefits Granted Current and Future Issues: –Non-retirement uses of benefits (“leakage”) –Will participants run out of retirement income?
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Contribution Rates and Benefits of the U.S. Pension System International Pension Conference FIAP and the Chilean Pension Funds Administrations Association
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