Retirement Plans: 401(k)s, IRAs and Other Deferred Compensation Approaches 10th Edition by Allen, Joseph Melone, Jerry Rosenbloom, Dennis Mahoney

Exercise 6

Many people have suggested that the PBGC should switch to a risk-related premium structure in which the premium a sponsor pays for plan termination insurance is based on (a) the relative likelihood that the plan will terminate and (b) the potential magnitude of the claim. Discuss the relative merits of this approach.