Over the past 40 years, the primary retirement plan offered by most employers has transitioned from traditional defined benefit (DB) plans to defined contribution (DC) plans. While these retirement plan designs offer important benefits to employers, the shift has created some negative consequences that are becoming evident as the first generation of DC-only participants begin to retire.
A hybrid retirement plan incorporating design features of traditional DB plans and DC plans may provide the best results for both employers and employees. In this article, Milliman consultants discuss how and why the first generation of DC-only retirees is struggling. They also explain how a hybrid retirement plan like the Milliman Sustainable Income Plan® (SIP) helps employers and employees share retirement risks in a more rational way.