AK Steel Holding

Many younger workers, say those that have entered the workforce from the 1990s through today, probably will not receive a defined benefit pension when they retire. Younger workers are not unfamiliar with defined pension plans. They have heard of them, probably by way of their parents or grandparents.That is to say the number of U.S. companies paying defined benefit pensions has dwindled over the years. Unfortunately for investors, companies' pension obligations have not dwindled and underfunding of pensions is on the rise. One culprit is the low interest rate environment."Discount rates for pension liabilities dropped from 7.4% in 1999 to 4.7% in 2011 This translates to a 190% increase in liabilities for a typical plan," according to J.P. Morgan research .Return assumptions that were too rosy are another culprit. Some companies left plans underfunded assuming the go-go days of the 1990s equity markets would return."If pension assets had grown at the typical plan's expected rate of retu...

Read More ›