Pension Plan Terminations and Asset Reversions: Accommodating the Interests of Employers and Employees
This Note focuses on the problems that often arise for plan participants when an overfunded defined benefit plan is terminated and the employer recaptures excess assets. Part I explains the relative ease with which employers can terminate plans and receive excess assets under current pension law. Part II argues that pension law must be reformed because its shortcomings threaten American workers’ retirement income security, it allows for sham terminations that remove assets from plans that are, in fact, ongoing, and it usually allows excess assets to go to employers rather than employees. Part III discusses two reforms proposed for plan terminations and asset reversions, which are the Plan Termination and Reversion Control Act of 1985, and conditional employer withdrawals of assets from ongoing plans. Part III also highlights some of the strengths and weaknesses of these two policy options.