University of Missouri System Board of Curators: Compensation & Human Resources Committee: A Review of Salary and Benefit Programs

University of MissouriBoard of CuratorsCompensation & Human Resources Committee
A Review of Salary and Benefit Programs
August 2009
Betsy Rodriguez, Vice President for Human Resources
and
Mike Paden, Associate Vice President for Benefits

Total Compensation Overview

Compensation Philosophy
Total Compensation Philosophy
Attract and retain highly qualified employees through salary and benefits that are:
Competitive (measured by peer comparisons)
Cost effective (measured by national and regional benchmarks)
Valuable (measured by employee surveys and peer comparisons)

University must manage and support its TALENT through programs and services that cover the employment and employee lifecycle.
Note: Programs not traditionally considered part of total compensation include employee development and training, career progression opportunities, employee assistance programs, etc. and are not included in this presentation.
Compensation Philosophy (continued)

Employees’ needs and values change throughout their employment and employee lifecycles …
Compensation Philosophy (continued)

Lifecycle Events
Employee demographics
Average Age: 45
Turnover Rate: 13% per year
(higher turnover for those < 5 years)
Salary level: 50% employees make < $50,000
Average Length of Service: 9.8 years
Other considerations
Marital status
Dependents
Geographic location (rural vs. urban)
Medical history

Workforce Demographics
Benefits Eligible employees = 19,000

Workforce Trends
Pending retirement of Baby Boomers
(23% of UM population is 55 yrs and older)
Smaller population to replace Baby Boomers
(Labor shortage expected 2010-2016, especially in health care, info technology and education)
Generational differences– different values and expectations from employees
Increasing demand for work/life balance

Salary Overview

Salary Overview
Most significant part of total compensation
University spends $1 billion annually on benefits eligible salaries
Lower public sector salaries are often viewed as counterbalanced by stability, job security, and substantial benefits package (especially retirement plans)

Salary Overview (continued)
Initial Salary
Job salary ranges based on: market, job level, job scope
Individual salary based on: market and recruitment conditions, applicant skills and experience, and internal equity*
Salary is not based on funding source
Initial salary is critical given relatively minimal annual adjustments and career progression opportunities
*New hire salaries often create significant internal equity issues.

Annual salary adjustments
Adjusted in September, based on funds availability, within ‘pool’ established by board of curators
Based on merit*, with available salary budgets distributed under locally administered processes
Typically ‘base building’
Occasional market adjustments (e.g. Fall ’08)
Annual adjustments may include promotion (e.g. academic progression)
Supervisors are expected to complete annual performance evaluations
*Assumes salaries are already at market

Salary Decisions
Executive Order 6 – establishes delegated responsibility
Access to market data (through Human Resources or website)

Other salary programs:
Extra Compensation (360.010) - pay for duties outside or above the 'normal' duties
Executive Compensation/Incentive (by incentive plan or individual contract)
Summer appointments (360.020) - pay for 9-month faculty who elect to teach or conduct other academic work during the summer months
Incentive compensation (360.150) - incentive pay plans
About 40 plans across campuses
Typically done for revenue generating areas (sales, dining halls, athletics)
Require President approval

Salary DatabyEmployee Group

Salary Data: Faculty
Faculty-Unranked
Titles such as Lecturer, Instructor, Research Associate, Program Director, Extension Specialist
Approximately 2,280
Term appointments (annual or no more than 3-year)
Average salary = $47,940 (12-month)

Faculty-Ranked
Assistant Professor, Associate Professor, Professor (including clinical/professional practice, research, teaching, and extension nontenure tracks)
Approximately 3,200
Term appointments and continuous
Average salary ranked faculty = $74,048 (9-month)
(tenured/tenure track = $78,338)
(nontenure track = $60,194)

Salary Market Data – Faculty (Ranked)
Established based on discussions with academic campus leadership
Market comparisons by academic discipline
Derived from the following data sources:

Association of American Universities (AAU)
Association of Public Land Grant Universities (APLU)
College & University Professional Association for Human Resources (CUPA-HR)

From data sources developed 5 market comparisons:
AAU Inclusive (all 35 AAU institutions)
AAU (excludes institutions in coastal states)
CUPA-HR Public National (50 public institutions: doctoral granting; intensive research; 15,000 and higher enrollment)
CUPA-HR Urban 21 (21 institutions located in urban areas)
APLU (land grant institutions excluding coastal states)

Data are focused on the contiguous states (and one state removed)
Updated annually but typically lags about six months
Medical school faculty are excluded from all disciplines due to the higher salaries associated with MD degrees
University and market data are accessible online to department chairs, deans, and provosts –SEE SAMPLE

Faculty market data are available online to all campus academic administrators, including department chairs
See next slides for sample data by campus and selected disciplines

11-Month Salaries
Tenure and Tenure Track

Peer Comparisons: Faculty Salaries
Includes all ranked faculty per AAU definitions
Chart shows percent growth in overall salary base, with an average salary
Average salary ranges from $73k to $116.8k
MU was only one of few schools with increase in 2008
With strategic investment in Fall 2008, MU remains next to last

Salary Peer Comparisons: Faculty

Salary Comparison Samples

Salary Data: Hourly Employees
Hourly employees
Total payroll $233 million + benefits $49.8 million

Service/Maintenance& Skilled Trades
Titles such as Police Officer, Child Care Assistant, Food Services, Custodians, Power Plant Operators, Electricians, Pipefitters
Approximately 2,150 employees
Majority are union eligible positions (about 20% are union members)
Meet and confer for annual agreement, nonbinding
Average hourly rate = $14.50 (range from $8 to $31)

Hourly employees (continued)
Office administration / Support
Titles such as Administrative Assistant, Office Support Staff, Fiscal Assistant
Average hourly rate = $14.50 (range from $7.25 to $35.00)
Technical
Titles such as Research Technician, Optician Assistant, Broadcast Technician, Reactor Operator, Computer Operator, Hygienist
Average hourly rate = $16.75 (range from$8.00 to $39.50)

Salary Market Data – Hourly Employees
Compared to local/regional markets
Note: Columbia IS the market for many positions
Union salary structure is discussed during annual ‘meet and confer’
Union salary structure is a step system by which employees in same title with same length of service receive same hourly pay

Salary Data: Salaried Employees
Salaried employees
Total payroll $772 million + benefits $165 million

Professional
Titles such as Programmer / Analyst, Attorney, Psychologist, Accountant, Engineer, Chemist
About 4,100 employees
Average annual salary $50,400

Salaried employees (continued)
Administrative / Manager / Executive
Titles such as Farm Supervisor, Ticket Manager, Admissions Director, Placement Director, Coach, Provost, Chancellor, President
About 1,900 employees
Average annual salary $79,000

Salary Market Data – Professional, Administrators and Executives
Sources: Salary.com and other purchased or generated market databases
Administrative work varies across many industries (e.g., agriculture, entertainment, sports, retail, finance, print, power generation, restaurant, resource management, housing, research, healthcare, student services)

Salary Market Data – Professional, Administrators and Executives (continued)
Maintaining competitive pay across these industries is constant balancing act as each industry moves in response to economic conditions and labor markets
Large salary differences across industries lead to issues of ‘fairness’ and ‘equity’ among university employees (e.g., typically student services have lower market salaries than finance)
Assess markets and salary needs within Occupational Group(s)
Exception: Senior Leadership and strategic valued position
are often individually compared to market

Sample Staff Market Data: Salary.com
Salary.com

Sample Staff Market Data: CUPA-HR

Salary Peer Comparisons: Staff
Do not have complete data on every staff position compared to market
Need to do significant work to develop accurate market comparisons (due to title inflation and other considerations)
Selected 150 titles—salaried only for comparison

Salary Peer Comparisons: Staff
Staff by Select Occupational Groups
69.5% of mkt
79.9% of mkt
89.7% of mkt
90.8% of mkt
91.9% of mkt
UNIV
MKT
79.6% of mkt

Salary Increase History: Faculty and Staff

Summary Observations of Salary
UM salaries are below peers regardless of how data are analyzed
We typically hire at lower end of range (which is below market) because of internal equity issues, but fall further behind quickly
High turnover in the first 2-3 years is costly
High turnover will be exacerbated as we reach workforce shortages
Increasing market pressure on new hires creates salary ‘compression’ (new hires at or above longer term employees)
Small annual merit pools have exacerbated market situation
‘Catch up’ will require strategic multi-year investment

Faculty & Staff Benefits
August 20, 2009

UM Retirement and Staff Benefits Committee

UM Retirement & Staff Benefits Committee
UM Retirement, Disability & Death Benefits Plan
Rules and regulations for administration of the plan
Interpretation and construction of the plan
Rulings subject to review and final determination by Board of Curators
Advisor to President on Benefits Issues
Plan design and development
New program offering
Strategic planning

UM Retirement & Staff Benefits Committee
Required Membership
President of the University, Ex-Officio
Chair – appointed by the President
Other members – appointed by the President, with a majority being faculty

UM Faculty & Staff BenefitsAdministration

UM Faculty & Staff BenefitsOrganization and Responsibilities

BenchmarksHewitt Associates Benefits IndexRelative Value Study
A Study of Comparative Benefit Values

Comparator Institution BenchmarksHewitt Associates Relative Value Study
Indiana University
Iowa State University
Michigan State University
Ohio State University
Pennsylvania State University
Purdue University
Texas A&M
University of Colorado
University of Illinois
The University of Iowa
University of Kansas
University of Michigan
University of Minnesota
University of Nebraska
University of Texas

Value vs. Cost – A Distinction
Employer Value Index-Average=100
Total Value Index-Average=100
Employer Value Ranking
Total Value Ranking
Frequency-every 5 years

*After 7/1/09 pension plan amendment

Benefit Eligibility

Employee Benefit Enrollment Eligibility
Employees Eligible to Enroll
75% FTE
Appointment duration of at least 9 months
Employees Not Eligible to Enroll
Students
Part time
Temporary

Dependent Enrollment Eligibility
Legal Spouse (domestic partners not recognized)
Surviving Spouse
Children

Benefit Plans Offered
Conventionally Insured, No UM Subsidy
Conventionally Insured, UM Subsidy
Self Insured, UM Subsidy
Pension and Deferred Compensation
Other Employer Sponsored Plans

Conventionally Insured, No UM Subsidy Health and Welfare Plans

Conventionally Insured, UM Subsidized Health and Welfare Plans

Self Insured, UM Subsidized Health and Welfare Plans

Retirement & Deferred Compensation Plans

Flexible Benefits Plans No UM Subsidy

Other Benefit Plans

Benefit Plans Contribution AnalysisBased on 2009 Contribution Rates

UM Dental Benefits Plan

UM Dental Benefits Plan
Self Insured
50% UM Premium Subsidy

UM Dental Benefits Plan (cont.)
$100 Deductible (not applicable to
preventive care)
Preventive Care = 100% coverage
Other Care = 50% to 80% coverage levels
Maximum Annual Benefit = $1,500

UM Dental Benefits Plan (cont.)
Benchmark
Observations:

Deductibles of other plans are $25 - $50
All other plans cover orthodontic
UM requires higher employee contribution

percentage

UM Long Term Disability Plan

UM Long Term Disability Plan
Self Insured
Claims Payment – UM Faculty & Staff Benefits
3 year pre-existing condition period
5 month elimination period
Integration with other plans
Option A - 60% of salary benefit, no employee premium
Option B - 67% of salary, employee premium required

UM Long Term Disability (cont.)
Benchmark
Observations:

Average benefit percentage - 62%
Average maximum benefit per month - $10,000
10 of 15 require employee contributions for base

coverage

UM Death Benefit Coverage

Death Benefits
Group Term Life
Insurer – Minnesota Life
Up to 2X Salary
UM Subsidized
Supplemental Term Life
Up to 3X Salary
No UM Subsidy

Death Benefits (cont.)
Accidental Death & Dismemberment
Up to $150,000
UM Retirement, Disability & Death Benefit Plan
Vested Status Required
Greater of 2X Salary or present value of future pension benefits
UM Subsidized

UM Group Term Life Insurance
Benchmark
Observations:

Significant diversity in employer subsidized

coverage from lower fixed amounts to higher
multiples of salary

Lower Total Value primarily due to the average

overall access is 6 X pay.

UM Medical Benefits Plan

UM Medical Benefits Plan
Choice Health Care Program (Point of Service)
Catastrophic Health Care Program

UM Choice Health Care Program
Self Insured
Network Based
Eligible Population – Active and Retired Employees
Active Employee Premium Subsidy – 73%
Design Objectives and Features

UM Catastrophic Health Care Program
Self insured
Eligible Population – Active and Retired Employees
Active Employee Premium Subsidy – 66-2/3%
Non Network Based

Medical Benefits Plan – Active Employees
Benchmark
Observations:

Narrow range among institutions in total value: 87.3 to 110.1
UM subsidizes slightly less than average of other institutions

Medical Program Premium Changes
* projected
Benchmark – Towers Perrin Health Care Cost Survey (500 employers, 10 million employees)

Towers Perrin 2008 Health Care Performance Study
UM actual costs were 16% below the benchmark in total
UM actual costs fall below the 25th percentile
UM overall program efficiency is 16% below the database. Translates into current savings of $23.9 million
UM administration fees are competitive and fall below the 25th percentile

Healthy for Life: T.E. Atkins UM Wellness Program
UMHS pilot began in 2004; extended to campuses 2007
Cost-Effectiveness: 524 employee volunteers; over 450 student volunteers per year; doctoral, masters, & undergraduate practicum students provide an array of program support
Broad Penetration: 3,920 wellness fair employee attendees; 3,995 annual screenings; 2,333 pedometer program enrollees, 957 other physical activity program enrollees; 210 tobacco interventions
Leveraging Resources: received grant to support the nation’s first use of self-management model for employee health & job satisfaction
Benchmarking: data warehouse will aggregate & analyze data on health behavior, wellness program enrollment, sick leave, worker compensation/work injury, and claims experience
Data-driven Planning: Goal to improve tools & incentives for annual health survey to monitor and mitigate emerging health risks

UM Pension and Deferred Compensation Plans

Deferred Compensation Program Alternatives

UM Retirement, Disability & Death Benefit Plan – A Hybrid Pension Plan
Defined Benefit Plan
5 Year Vesting
Benefit Formula:
2.2% X length of service X final average salary
Final average salary – 5 highest consecutive
Minimum Value Accumulation
5% of salary
7-1/2% interest rate

Deferred Vested Benefits
Vested but not eligible for early retirement
Lump sum distribution available
Cash (taxable)
Rollover non-taxable
Reduced annuity benefits as early as age 55
Full annuity benefit at age 65

Early Retirement Benefits
Reduced Benefits
Age 55 = 10 years of service
Reduction factor = 3-1/3% for each year retirement precedes age 65
Unreduced Benefits

Normal Retirement Benefits (unreduced)
Age 65

UM Retirement, Disability & Death Benefit PlanCurrent Benefit Recipients

History of Actual UM Contribution Rates
% of payroll

UM Retirement Disability and Death Benefit PlanHistory of Major Amendments

Guaranteed Cost of Living Increase
Employee Election
Reduction in Initial Benefit
2% Option
4% Option

Comparison of CPI-W to UM Pension Ad Hoc Adjustments through September 2008

UM Retirement Disability and Death Benefit PlanRecent History of Pension Adjustments Awarded

Benchmark – Before 7/1/09 plan changes
Benchmark – After 7/1/09 plan changes

Observations
All institutions offer defined contribution pension plans
5 institutions also offer defined benefit plans
Average employer contribution rate = 9.6%
Average employee contribution rate = 5.75%
Employer contribution rate range = 6.8% to 15%
Low total value ranking is due to other plans requiring higher employer contribution

UM Post Employment Benefits

Other Post Employment Benefits Liabilities
GASB 45
Annual Liability Accrual - $47.6 million
Annual Funding Rate – 50%

UM Post Employment Benefits
UM Subsidized
Medical Benefits
Dental Benefits
Group Term Life Insurance (to age 70)
• Long Term Disability Benefits
Not UM Subsidized
Supplemental Life Insurance
Dependent Life Insurance
Vision Benefits
Accidental Death & Dismemberment
Long Term Care

Retiree Medical PlansUM Premium Subsidies
Retired Prior to September 1, 1990
67% employee and spouse
33% surviving spouse
Retired on or after September 1, 1990
Subsidy based on age + service
Range for employee coverage = 33% to 73% (average 50%)
Range for spouse coverage = 18% to 33%
(average 25%)

UM Retiree Indemnity Medical Program
Self Insured
Eligible Population – Medicare Eligible Retirees
Non Network Based
Relationship to Medicare

Medical Benefits Plan – Retired Employees
Benchmark – Pre 65
Observations:

In most instances plan design is same as active employee
Above average coverage
More liberal eligibility requirements
3 Universities provide access only coverage

(no employer subsidy)

Benchmark – Medicare Eligible
Observations:

8 institutions use “carve out” approach with Medicare
3 institutions provide access only coverage

Benchmark – All Retirees

Summary Observations of Benefits
In order to be competitive in the recruitment and retention of faculty and staff, UM benefit programs must at least be at the average of peer institutions
UM offers a competitive array of benefit programs that are currently slightly below the average of its peer group
UM, strategically, assumes risk through self-insurance when appropriate
UM employees, through premiums/contributions bear a significant portion of the cost of providing UM benefit programs

UM employees, at the time of purchasing health care services bear a significant portion of cost for services rendered
Areas of significant deviation from the average of the peer group include:
Above average
Employer Paid Value of Long Term Disability Base Plan
Employer Paid Value of Post Retirement/Pre 65 Medical Benefits
Below Average
Employer Paid Value and Total Value of Dental Benefits

The 7/1/09 change that requires UM employees to contribute to the pension plan has resulted in a significant decrease in UM’s ranking among peer institutions in both the pension and overall categories
The majority of peer institutions continue to offer subsidized post employment health care benefits
UM is unique in offering a defined benefit plan as the primary pension plan avenue

Total Compensation: Salary and Benefits Compared to Peers

Total Compensation Compared to PeersRanked, Tenure-Track Faculty
*22% of UM ranked faculty are on 9 month appointments salaries adjusted to
11 month basis for comparison purposes

Total Compensation Compared to PeersStaff Job Families

Total Compensation Compared to PeersStaff Job Families (cont.)

Total Compensation Conclusions
Both salary and benefits (total compensation) are critical factors for recruitment and retention
On average UM total compensation is lower than peers, especially for salary
Less competitive total compensation will exacerbate the impact of projected workforce shortage and high turnover rates
CORRECTION WILL REQUIRE MULTI YEAR STRATEGY AND INVESTMENT

COMPARING DEFINED BENEFIT ANDDEFINED CONTRIBUTIONS PLANS
Impact on Contributions and Benefits of Implementinga Defined Contribution Plan for New Employees
August 2009
Presented by:
Howard Rog, FSA, MAAA, EASenior Vice President and Actuary
This document has been prepared by The Segal Company for the benefit of the University of Missouri and is not complete without the presentation made to the University. This document should not be shared, copied or quoted, in whole or in part, without the consent of The Segal Company, except to the extent otherwise required by law.
Copyright ©2009 by The Segal Group, Inc., parent of The Segal Company. All rights reserved.

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Definitions
Defined Contribution Plan
Fixed annual contributions, defined under the plan, accumulate with investment income to a lump sum available at retirement
Can be annuitized
Monthly annuity income depends on how much has been accumulated
Defined Benefit Plan
Provides a monthly pension calculated under a benefit formula “defined” under the plan
The University's retirement plan is a defined benefit/“hybrid” plan

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Comparison of Accumulated Benefits
UNDER THE UNIVERSITY’S PENSION PLAN VS. 10% OF PAY DEFINED CONTRIBUTION PLAN
Early Retirement Subsidy

118
Key Employee Advantages
Defined Benefit
Employer assumes investment risk
Benefits determinable prior to retirement
Final average pay plans responsive to pay increases
Rewards long service
Provides protection against inflation and disability
Employee can’t outlive benefits
Provides vehicle for early retirement benefits
Provides survivor benefits
Defined Contribution
Benefits are more portable
Simplicity
Employee investment control
Faster account build-up for younger employees
Provides capital accumulation

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Key Employer Advantages
Defined Benefit
Favorable investment performance reduces costs
Funding flexibility
Design versatility
Defined Contribution
No investment risk
Predictable budgeting
Appreciation by younger workers
Potential ease of administration depending upon number of investment choices

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Impact of Implementing a DefinedContribution Plan for New Employees
Objectives of the Study
Explore the impact of introducing a defined contribution plan for new employees
Determine the future retirement contribution requirements and unfunded pension plan liability by performing 20-year stochastic projections
Understand potential impact on participants’ future benefits using stochastic modeling

121
Impact of Implementing a DefinedContribution Plan for New Employees continued
Methodology
Impact on Contributions and Unfunded Liability:
Investment returns were projected using 1,000 Monte Carlo simulations
The projections were performed under two alternatives
The first was to assume that the pension plan continued to be open to new employees. The second was to assume that the pension plan would be limited to existing employees (“closed group”) and new employees would be covered by a new defined contribution plan
The defined contribution plan’s projected contributions were based on an annual 10% of pay contribution from the University

122
Methodology
Impact on New Employees’ Benefits:
Benefits for a new employee hired at an age of 30 were studied
Assumed the employee would invest their accounts in a “life cycle” fund
A life cycle fund is one in which the asset allocation between equities and fixed income changes over time as the employee ages
Benefits at termination ages prior to age 55 were studied by comparing the defined contribution account balance to the Minimum Value Accumulation Account
Benefits at retirement ages of 55 and over were studied using income replacement ratios.
An income replacement ratio represents the percentage of the annual retirement benefits (payable as a life time annuity) to the employee’s last year’s salary

123
Recent Events
University’s Board of Curators approved a change to the Pension Plan which requires employee contributions to the plan to offset part of the University’s contribution requirement’s
This change has not been reflected in this study

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Impact On Contribution Requirements of Implementinga Defined Contribution Plan for New Employees
On the basis that new employees will have the defined contribution plan offered to them, below are the percentages of total payroll covered by the two retirement programs change over time
% of Payroll Covered

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Impact On Contribution Requirements of Implementinga Defined Contribution Plan for New Employees continued
Projected Contributions 2010 (Percentage of Payroll)

On an expected basis (mean/50% percentile basis), the long-term cost of the defined contribution plan for new employees is greater than if they participate in the pension plan
There is a narrower range of total University retirement contributions with the introduction of a defined contribution plan for new employees.
However, this comes with a higher total expected retirement cost to the University

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Impact On Contribution Requirements of Implementinga Defined Contribution Plan for New Employees continued
Projected Contributions 2025 (Percentage of Payroll)

On an expected basis (mean/50% percentile basis), the long-term cost of the defined contribution plan for new employees is greater than if they participate in the pension plan
There is a narrower range of total University retirement contributions with the introduction of a defined contribution plan for new employees.
However, this comes with a higher total expected retirement cost to the University

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Impact On Employees’ Benefits of Implementinga Defined Contribution Plan for New Employees
Using appropriate actuarial scenario techniques, we modeled the replacement defined contribution plan for a hypothetical employee of the University of Missouri hired at the age of 30
Steps
Select a typical employee (male academic employee hired at age 30)
Model the Defined Contribution (DC) plan design
Simulate changes in the employee’s compensation base and account value from hire date to various retirement dates
Compensation base varies with salary inflation
DC account balance varies with the assets’ monthly rates of return
At retirement, convert the DC account into a life annuity
The life annuity varies with the prevailing interest rate environment
Determine the ratio of annuity conversion to the employee’s compensation base
Perform this process many times so that robust measures of expectancy and risk can be quantified
Compare the benefits from the DC plan with that of the current pension plan (DB)

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Impact On Employees’ Benefits of Implementinga Defined Contribution Plan for New Employees continued
Lump Sum Benefits prior to reaching early retirement eligibility (pre-age 55):
The defined contribution plan provides for a 10% of pay contribution, while the Minimum Value Accumulation (“hybrid feature”) under the pension plan provides a 5% of pay credit
The investment credit under the defined contribution plan is based on the actual market returns of the invested assets while the Minimum Value Accumulation in the pension plan provides a guaranteed investment credit of 7.5% annually
At the 50th percentile, the lump sum paid to the employees prior to retirement eligibility is double what is paid from the pension plan
There is a significant range of the lump sum payable from the defined contribution plan compared to that from the pension plan

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PROJECTED ACCOUNT VALUE AS A PERCENT OF FINAL COMPENSATION
Employee hired at age 30.
Terminates prior to early retirement eligibility (pre age 55)

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Retirement Income Benefits after reaching eligibility for retirement:
At retirement age 65, approximately half of the time employees will be able to match or exceed the replacement ratio (RR) of the defined benefit plan:
50% of the future scenarios show the DC plan providing a RR of 76% or more
But, in worst case scenarios, employees face a catastrophic replacement ratio with serious consequences on their retirement viability:
5% of simulations have a RR at age 65 equal to or less than 24% or approximately one third of the defined benefit plan
At retirement ages prior to age 65, there is about a 40% probability that the defined contribution plan will provide equal or better benefits than the pension plan. At retirement age of 70, there is a 60% chance of it providing a greater benefit

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INCOME REPLACEMENT RATIO ANALYSIS
Employee hired at age 30

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Questions and Discussion