Small Businesses Take New Look at Traditional Pension
Investor's Business Daily (08/11/00) Vol. 104, No. 32 p.B1; Mencke, Claire

Defined-benefit pension plans still exist, though they have been somewhat overshadowed by defined-contribution plans, and Watson Wyatt Worldwide retirement practice leader Bill Miner says that the former fill the need for stable income that a person cannot outlive. A.G. Edwards & Sons vice president Kristin Wagner says that small companies are looking into defined-benefit plans, as are baby boomers, while older workers are finding that such plans can help them catch up if they have not saved enough for impending retirement. She notes that defined-benefit plans give workers a guaranteed set benefit and employers a tax deduction, though Wagner also notes that they can be complicated to set up. However, she says, they are not as difficult to start as they used to be, and they can attract skilled workers in the tight labor market. Wagner says that providing both a 401(k) plan and a defined-benefit plan is better for workers. Miner points out that defined-benefit plans tend to have better returns than 401(k) plans, and they are cost-effective for companies.


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