Whatever happened to defined benefit plans?

Article Abstract:

The popularity of defined benefit pension plans is waning due to reductions in senior managers' benefits dictated by non-discrimination regulations, increased costs in administering the plans, regulatory sanctions against over-funded plans, and enhanced government supervision of plans. Plus Plans, Inc. enrolled actuary Nathan Kolbes and Mutual of Omaha Companies Pension Administration head Mark Jewett recommend that companies adopt a combination of two qualified defined contribution plans: a target-benefit money-purchase plan and a 401(k) plan. Employers realize savings because a significant proportion of contributions are from employees' own 401(k) plans; administrative expenses are less than those of a defined benefit plan due to reduced government reporting requirements; and participants are exposed to the risk and rewards of plan rather than the sponsoring employer.

Analysis, Management, Salary reduction savings plans, 401K plans, Defined benefit plans, Kolbes, Nathan, Jewett, Mark, Plus Plans, Inc., Mutual of Omaha Insurance Co.

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Managed care: assessing cost and quality

Article Abstract:

Managed care is coming to be recognized as one of the most cost-effective way of providing health care. In 1991, enrollment in managed care programs has risen to 38.2 million from 10.2 million ten years before. There are currently three types of managed care: health maintenance organizations (HMOs), preferred provider organizations (PPOs) and point of service plans. Under all of these managed care plan forms, doctors and facilities are contracted to provide medical services, health care providers maintain utilization and quality controls, financial incentives are employed to encourage subscribers to utilize contracted doctors and facilities, and part of the financial risk is borne by the health care provider. HMOs, PPOs and point of service plans are briefly described. Several cost and quality issues relating to the selection of managed care plans are discussed.

HEALTH SERVICES, Evaluation, Managed care plans (Medical care), Health maintenance organizations, Preferred provider organizations (Medical care)

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Age-weighted profit-sharing plans

Article Abstract:

Traditional profit-sharing plans are popular since they grant funding flexibility to employers, provide easily understood individual employee accounts and allow employers to claim tax deductions for plan contributions. However, traditional profit-sharing plans have one major drawback in that they usually do not allow older employees to build up an adequate retirement income. The age-weighted profit-sharing plan, which is structured to favor older employees, provides employers an alternative mechanism for allocating contributions. In such an age-weighted profit-sharing plan, allocations are computed on the basis of an employee's age-weighted compensation. IRS rules, however, mandate that this age-weighted plan be subject to a nondiscrimination test to ensure that key employees do not get more than 60% of a plan's total contributions.

Economic aspects, Employee benefits, Profit sharing

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