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February 2018 Archives

Lessons Learned the Hard Way When This U.S. City Replaced Its Retirement Program With One That Severely Cut Benefits

For over fifty years, Palm Beach, California maintained a generous traditional defined benefit (DB) pension plan for its employees that based benefits on a percentage of the employee's final average pay times years of service. As employees accumulated service and their pay increased over the years, their pension benefits grew exponentially. Upon retirement, the benefit was paid in the form of a life annuity, thereby guaranteeing that participants would never run out of money.