Meir Statman : Defined Contribution Plans : Pensions & Investments
As the keynote speaker at the recent Pensions & Investments' West Coast Defined Contribution Conference, Meir Statman, Glenn Klimek Professor of Finance at the Leavey School of Business, discussed his thoughts on the defined contribution plan - a retirement plan for a company’s employees. As noted in a recap published by Pensions & Investments, Statman supports defined contribution plans where corporate contributions are unconditional on employee contributions, stating that "atching penalized the poor."
An excerpt from the piece:
The [defined contribution] employer contribution is about 4% of participants' pay, but the [defined benefits] contribution has been basically double that amount, he said.
However, Mr. Statman said more DB plans isn't the answer. "I don't advocate a return to defined benefit plans," he said. The best solution is a mixture a Social Security and DC because the former provides downside protection, while the latter offers upside potential.
Statman believes such plans together will allow for a mutual payment of a company’s administrative costs. While he supports having these plans available, Statman argues that there should be limitations regarding the time of withdrawal.
Learn more about Professor Meir Statman »