For some large companies, a defined benefits plan is a cost-effective way to provide additional rewards to some of their most valuable workers while allowing the employer to retire employees in an orderly manner, according to a new paper released by Towers Watson.
In its "Perspective" paper, Towers Watson outlined how various employees would fare based on participation in a DB plan versus a defined contribution plan and assessed whether the workforce planning advantage of DB plans justify the cost and risk of plan sponsorships.
Towers Watson used its proprietary FiT Age model to compare the benefits provided by DB and DC plans that have similar long-term average costs.
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