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Blueprint for Building a Robust Funding Policy

Jan 09, 2020

Key Takeaways

  • A well-constructed retirement program funding policy can help lead to better outcomes.
  • There’s no “one size fits all” funding policy design - personalization is key.
  • Funding rules for public sector plans may differ from corporate organizations in their rigidity and prescriptiveness.

 

Plan underfunding, changing demographics, increasing strain on a static tax revenue base, and plan designs with unintended costly consequences are some of the challenges confronting sponsors of defined benefit retirement programs in public sector systems. As a committed leader in the public sector retirement space, Prudential Retirement® is equipped to assist public sector systems with challenges related to their retirement programs.

 

 

One thing public sector decision-makers can do to balance key, and sometimes conflicting, objectives of stakeholders within their defined benefit system is to build and adhere to a sound funding policy. A well-constructed funding policy can help manage a retirement program and lead to better outcomes for stakeholders. Since all public sector systems are unique, there truly is no one-size-fits-all approach in developing the most appropriate funding policy.

This white paper addresses various facets of a funding policy, including what constitutes a funding policy, the benefits of having one, and elements that shape the foundation of a policy.

 

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