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URL:  http://boards.fool.com/watty56-quotthe-biggest-upside-to-traditional-19845375.aspx

Subject:  Re: Traditional pension rant (long) Date:  11/12/2003  7:15 PM
Author:  JAFO31 Number:  37789 of 74759

Watty56: "The biggest upside to traditional plans that I see was that people were forced to participate."

I disagree. The biggest upside was that the company assumed all investment market risk. Defined contribution plans (like 401-k, IRA, etc.) transfer all the investment risk to the individual employee. Many employees do not want it, and as a result many underperform the market because of thier disinterest (or lack of discipline to form and execute a sound investment plan, instead of avoiding all investment risk with money market/GIC funds (inflation risk) or chasing the hot performer).

In a defined benefit plan, the plan sponsor/company retained that risk.

I tend to agree with your list of downsides.

Regards, JAFO


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