Pension Funding Reform: It's Time to Get the Rules Right (Part 2)

Abstract:     
The author addresses the issue of pension funding reforms in two separate articles. Part one previously explained ERISA's historical funding and plan termination rules in order to show why plan sponsors, such as United Airlines' parent UAL Corporation, were permitted to create and maintain unfunded pension plans and why the Pension Benefit Guaranty Corporation assumed some of those unfunded liabilities.

Part two discusses the need for reform in ERISA's funding and plan termination rules. This article will examine various legislative and industry proposals and the policy considerations relevant to such proposals, in light of historical mistakes that should be avoided with subsequent legislation. The article's conclusion makes recommendations in support of preserving the defined benefit system.

Accepted Paper Series