Defined benefit plans are usually thought about in one of two ways:
1) They're fascist. Plan sponsors can make decisions about how the money is invested, and in what kinds of payouts the participants are eligible for. Depending on a number of factors, that could influence anything from personal habits to family structure.
2) Bottom line, they're simply more valuable than defined contribution plans.
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Who wouldn't trade personal freedoms for a few dollars more? Most experts typically dismiss No. 1 as being heavily outweighed by No. 2, so it seems that's your answer.
But is your cash really better off in a DB plan?
We looked at all 2010 form 5500 filings made up to this date for small plans (where the majority of us have our money). Net assets in DB plans rose year over year by 10 percent. For DC plans, that number is 8 percent.
A 2 percent difference.
I'm not going to draw any conclusions there. Some would say that 2 percent is a huge difference, others would say that it's not enough to warrant losing the freedom of deciding where your money is invested and how you live your life outside of the workplace.
The beauty of data is that it can never conclude, it can only produce facts.
Of course, blog authors can leave out important facts, like how there are billions of dollars more in the DB plans we looked at for this analysis, but that's neither here nor there.
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