defined-benefit pension plan

Case Study The defined-benefit pension plan is a retirement program in rapid decline as businesses shift the risk of adequate employee retirement from themselves to their workers. According to CFO magazine, the percentage of full-time employees of large and midsize firms that participate in defined-benefit plans declined from 80% in 1985 to 33% by the end of 2003. Businesses shifted their employees to defined-contribution plans without guaranteed retirement benefits or dropped retirement plans altogether. Two events in 2006 accelerated the move to drop defined-benefit pension plans. The Financial Accounting Standards Board issued rules that require plan sponsors to include pension assets and liabilities in the body of their financial statements rather than as footnotes. This change increases the transparency of future pension liabilities. In addition, the Pension Protection Act of 2006 requires stiffer funding requirements and high premiums for government pension insurance.