Common wisdom might suggest otherwise, but a properly managed defined contribution plans can be as cost-effective as defined benefit pension plans, according to a study by the TIAA-CREF Institute.
Pension plan features, such as annuitized benefit payments and low-fee, professional asset management can be incorporated into the 401(k) and 403(b) plan models very easily. Many DC plans already include these features, including 401(a) and 403(b) plans sponsored by public and private colleges and universities, TIAA-CREF said.
DB plans do not hold any advantage over DC plans, according to its study.
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