Cheiron joins pension policy, government, labor leaders in retirement security forum
"It's time to think of new ways to encourage employers to provide pensions for their workers, and new types of pensions that do not put the full investment responsibility on workers," U.S. Labor Secretary Hilda Solis told a recent gathering of retirement thought leaders in Washington.
Cheiron President Gene Kalwarski, another speaker at the gathering sponsored by "Retirement USA," presented an outline for an alternative pension design, the Variable Defined Benefit Plan.
Other speakers at the event included AFL-CIO President Richard Trumka, Pension Rights Center Director Karen Ferguson, ERISA Industry Committee President Mark Ugoretz and others.
Kalwarski's presentation described a hybrid pension design incorporating elements of traditional defined benefit plans with defined contribution plan features. "Like a DB plan, the variable defined benefit plan, or VDB, assigns mortality risk to the employer, and all its funds are pooled and professionally managed," he told the group.
"But unlike a conventional DB plan, with a VDB, investment risk and performance are shared between the sponsor and participants," Kalwarski explained. The benefit provide by a VDB is the greater of a floor defined benefit, or a variable benefit which is dependent upon the pension portfolio's actual investment performance.
A summary of Kalwarski's description of the Variable Defined Benefit Plan is available here.