The Rising Tide of Pension Contributions Post-2008: How much and when?

by Joseph J. Silvestri, Retirement Research Actuary

Joe SilvestriJoblessness remains high. The stock market is jittery. And the economy is narrowly close to double dipping into recession. Against this backdrop of economic indicators, the Society of Actuaries undertook a research report to bring to light data on the aggregate contribution levels to single-employer defined benefit pension plans. Based on this analysis, we project annual aggregate contributions to the system will increase from approximately $66 billion (average annual contributions over the ten years ending in 2009) to $90 billion over the next decade (projected average annual contributions for ten years ending in 2019). I recorded the video below to provide a summary of the highlights of the report, The Rising Tide of Pension Contributions Post-2008: How much and when? Read the full report. If you have any questions, leave them in the comments section and I will get back to you shortly.

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2 responses to "The Rising Tide of Pension Contributions Post-2008: How much and when?"

  • Jim Benheim says:

    Interesting report Joseph. I am interested in the idea of “stress tests” for defined benefit contributions. Could you give examples of stress tests?

  • Chuck Austin says:

    As a retiree from a company that recently emerged from a government assisted bankruptcy, I’m concerned with the PBGC valuation method during bankruptcy which can take a 90% funded plan down to 60% funding, causing early retirees to lose significant benefits. It would seem that plans should be funded to a 125% level during good times to insure adequate funding during bankruptcy. Was this issue considered during your study? If not, from an actuarial viewpoint, how should this PBGC valuation issue be handled to protect retirees?

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