The Changing Future of Pension Plans

For Mark Roberts’ Use:

Change is inevitable in all areas of life, and retirement is certainly no exception. Even the best plans can be subject to pitfalls, which is why it’s important to review your retirement plan regularly to be sure it continues to fit your needs. Changes in the financial industry as well as government policy are prompting a shift in the way retirement is planned in the United States. Staying informed about these changes is key to planning a successful retirement.

During the 20^th century, employer-funded pension plans became popular. Many workers still rely on these plans when thinking about their retirements. However, because of the high cost of funding these plans, many employers are abandoning this benefit. Others have underfunded or at-risk plans, and some corporations have even defaulted. Pension plans are clearly in danger for many Americans, and may not be a reliable retirement plan much longer.

The federal government has responded to this problem by passing several laws to protect employees who have corporate pensions, but it’s possible that these laws are now back-firing. The laws require employers with defined-benefit plans to reach a 100 percent funding target, and these companies are required to pay insurance premiums to the Pension Benefit Guaranty Corporation. The PBBC, created by Congress in 1974, is designed to protect American workers against pension default. Since more companies have defaulted on their pension plans, these insurance premiums have been steadily increasing.

Due to these increased costs associated with pension plans, many companies are deciding this type of retirement plan is not worth the risk. Many companies with underfunded pension plans are simply eliminating them altogether. The result is that less companies are offering pension plans to new employees, and older employees can no longer count on their pensions to see them through their retirement years. When planning for retirement, it is important to keep these changes in mind, and to create a comprehensive plan that does not rely heavily on an expected employer-funded pension.

About the Author: Mark Roberts

In addition to managing clients’ money and giving investment and diversification advice, Mark offers something that “the other guys” don’t - a unique approach to Retirement Tax Strategies and distribution. Time and time again, Mark meets with new clients who tell him they have a great relationship with their financial advisor but have never been offered information on this kind of approach to securing their financial futures. Mark has taken this feedback to heart and works tirelessly to ensure that his strategies focus on taxes and distribution. Mark started selling insurance for a major insurance company right out of high school to help put himself through college. After graduating with a degree in finance, he dove into estate planning on the financial side to set himself apart from other financial advisors. However, as changes were made to estate tax laws over time, Mark shifted his focus to income tax strategies. Mark’s philosophy is “the blue prints are more important than the wall paper or carpet.” The wall paper and carpet represent products like investments and insurance policies, whereas the blue prints represent the strategies. Once strategies that truly fit the client’s needs are put in place, our focus can shift to providing you with the right products. According to Mark, “It doesn’t matter what carpet we use if the walls are not in the right place.” Our approach to money management is designed to generate the largest alpha (quality) with the lowest standard deviation and beta (risk). By doing this, we help provide clients with the highest return on the lowest risk. Generating income for our retirees is also very important. Because withdrawing money from your portfolio hurts the account rather than helping it, our goal is to design income strategies to harm the portfolio the least making the money last longer.

The Changing Future of Pension Plans

The Changing Future of Pension Plans

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About the Author: Mark Roberts