Loan & Distribution Specialist AimPoint Pension
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Compass
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Hall County Government
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AimPoint Pension
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Regional Vice President of Sales The Retirement Plan Company
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Bates & Company, Inc.
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Defined Benefit Combo Cash Balance Compliance Consultant Loren D. Stark Company (LDSCO)
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Future Rise in Interest Rates Might Bring Defined Benefit Plans Roaring Back
Financial Planning Sept. 30, 2012
"In today's low interest rate environment, defined contribution plans hold a clear cost advantage over defined benefit plans. The typical DC plan cost is 5% to 6% of plan payroll versus 17% for the typical DB plan ... But with a rise in interest rates defined benefits plans would become more cost-effective very quickly. Interest rate increases of 300 to 400 basis points, roughly equal to rates that prevailed in 2006-2007, would not only decrease defined benefit pension costs by 30% or more but would give defined benefit plans surpluses of 115% to 125% of liabilities[.]"
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