Beginning with the New Deal, efforts to secure the social and economic prosperity of employees after retirement have been developed. This process has lead to the evolution of the current system of corporate pension funds. Although millions of American workers invest in these funds each year, few have a clear understanding of how these funds work and the vulnerabilities that these funds face. In an effort to provide a more comprehensive understanding of corporate pension funds, this investigation provides: a history of pension funds in America, an overview of the types and structures of pension funds, a review of current trends in pension funds and a consideration of pension funds in the wake of corporate bankruptcy. This investigation concludes that there are both intrinsic and extrinsic problems with corporate pension funds. However, with no clear alternatives, the present system represents the best alternative for ensuring a prosperous retirement.
[...] To this end, this investigation provides a broad overview of the history of pension funds, the most common type of pension funds, current trends in pension funds and the problems associated with pension funds. Through a careful consideration of what has been written on this subject, it will be possible to provide a comprehensive overview of pension funds and how modern changes in business and bankruptcy have affected their viability. Pension Funds—A Historical Overview In order to begin this investigation, it is first helpful to consider a broad history of the corporate pension fund and its origins. [...]
[...] In order to understand this situation one only needs to consider the current problems that had developed with respect to Social Security. The Social Security system operates on the pay-as-you-go system. While this system has worked well over the twentieth century, as the largest segment of the population—i.e. the baby boomers—begin to retire, there is concern that benefits for these retirees cannot be supported. This is because the current generation of workers is notably smaller than the current population of retirees. [...]
[...] As noted by Fickes (2003) corporate pension funds are now set to make a huge investment in the real estate market. According to Fickes, the US pension funds have allocated $14 billion for real estate investments in 2003. Fickes notes that interest in real estate stems from the dismal performance of the stock market beginning in 2000. Noting the overall benefits that can be garnered by pension funds through investment in real estate, Fickes provides the following explication: Dow Jones Industrial Average fell nearly 17 percent during 2002, the first time the index has dropped for three years running since the Depression.” However, “well-stabilized and well-leased real estate assets that offer returns of to can help portfolios begin to recover from the shellacking they have taken in the stock and bond markets” (p. [...]
[...] Current Trends in Pension Funds With a rudimentary overview of the types of pension funds currently available, it is now possible to consider current trends in corporate pension funds. A precursory overview of what has been written about current trends in pension funds and pension fund management demonstrate that there are a host of notable changes that are currently occurring in this area. As such, it is helpful to provide a comprehensive overview of the recent scholarly literature that has been published on this subject. [...]
[...] Critically reviewing what has been written about US corporate pension funds and bankruptcy, it is evident that when an organization chooses to file bankruptcy the court must decide of the organization can stop making payments to its pension fund. If the court agrees that the organization does not have enough capital to pay into its pension fund, the federal government bears the brunt of the responsibility for making up the shortfall through the Pension Benefit Guaranty Corporation. “America set up the PBGC 30 years ago. [...]
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