The State Worker

Chronicling civil-service life for California state workers

October 12, 2011
Private defined benefit pension plans stressed, need more cash

Some of the same factors squeezing public retirement systems are affecting private pension providers.

A new report by the Society of Actuaries, "The Rising Tide of Pension Contributions Post-2008: How Much and When?," says that sponsors of private, single-employer defined benefit pension plans are going to have to kick in more cash over the next five years to cover their minimum required contributions.

A review of more than 400 private DB plans found that the recession, the equity market downturn and low interest rates that drive up costs of providing retirement benefits have together stressed the private pension plan system.

According to the report, employers contributed an average of $70 billion per year over the five years ending in 2009. Required contributions are expected to average $90 billion per year between 2010 and 2020, reaching a peak level of $140 billion in 2016.

"The data shows that employers, on average, have been contributing well in excess of the minimum requirements for the last several years," said Joseph Silvestri, a retirement research actuary with the SOA, in a press statement issued with the report. "While the system as a whole is successfully navigating the rising tide of minimum required contributions, there will be individual employers for whom the pension plan funding requirements pose a greater short-term challenge."

The Rising Tide of Pension Contributions Post-2008

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About The State Worker

Jon Ortiz The Author

Jon Ortiz launched The State Worker blog and a companion column in 2008 to cover state government from the perspective of California government employees. Every day he filters the news through a single question: "What does this mean for state workers?" Join Ortiz for updates and debate on state pay, benefits, pensions, contracts and jobs. Contact him at (916) 321-1043 and at


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