Dinosaurs are extinct. Pensions are alive and well.

Children love dinosaurs. These larger-than-life, astonishing creatures that existed some 66 million years ago continue to fascinate children and adults alike. Just think of how dinosaurs are still prevalent in modern popular culture – the blockbuster Jurassic Park franchise, the lovable Rex from Toy Story and the beloved Barney. Not to mention the countless dinosaur exhibits that are still very popular attractions in science and natural history museums around the world.

We sometimes hear defined benefit (DB) pensions compared to dinosaurs. Like dinosaurs, pension plans are fascinating, big and strong. They are a reliable source of retirement income and remain extremely popular among workers today. But unlike dinosaurs, pensions are not extinct. In fact, pension plans are alive and well today: they pay benefits to 25 million people, have $11.8 trillion in plan assets, and more than $600 billion in benefits paid annually to support seniors. About 90 percent of the state and local workforce has a retirement plan. While pensions are less common among private sector workers than they were fifty years ago, we are starting to see a revaluation of these corporate pension plans that employees like and value.

Congress takes a fresh look at pensions

The impact of fewer private sector pension plans on the retirement security of working Americans was the subject of a hearing before the U.S. Senate Health, Education, Labor and Pensions (HELP) Committee in February. I had the honor of testifying as an expert witness on the role of pension plans in enabling workers to retire with dignity, helping employers maintain a stable and resilient workforce, and strengthening the economy , especially in times of recession.

The HELP Committee remains committed to understanding the current role of pensions in the retirement security landscape and followed the hearing with a request for information (RFI) on policy actions Congress could take to improve the availability of pensions in the private sector to increase. It is encouraging that the Committee is taking this step as it demonstrates action to help working Americans address the retirement savings crisis and get back on track in preparing and saving for retirement. Congress has passed two major retirement policy bills in recent years, the Setting Every Community Up for Retirement Enhancement (SECURE) Act and SECURE 2.0, but these primarily focused on policies affecting 401(k)s and other defined contributions (DC). plan. Pensions and policies that would support these private sector plans are now getting the attention they deserve from Congress.

The National Institute on Retirement Security (NIRS) went to work after the hearing and prepared a report in response to the HELP Committee’s RFI. That report, Policy Ideas for Boosting Defined Benefit Pensions In The Private Sector, recommends six possible policy actions that Congress could take to boost private sector pension plans. These recommendations include:

— Reduction in the per-person rate of Pension Benefit Guaranty Corporation (PBGC) premiums for single-employer pension plans.

— Reduction of the PBGC variable rate premium.

— Formally recognize risk-sharing plans in law.

— Enabling greater flexibility in the use of surplus funding in OB plans.

— Allowing pre-tax employee contributions into private sector pensions, similar to state and local government pension plans.

— Formally recognize in law that pension benefits should be fungible for each individual and allow transfers from defined contribution schemes to pension schemes (and vice versa) along the lines of Revenue Ruling 2012-4.

While each of these policy actions individually may not represent major change, together they provide a path to increasing the availability of retirement plans, especially by addressing employers’ concerns about financing retirement plans.

Corporate America is also taking a new look at pensions amid strong markets and workforce challenges

Corporate pension schemes are currently flourishing. The most recent Milliman 100 pension funding index reported a funding ratio of 103.4 percent on April 30. While rising interest rates pose challenges for many consumers, they help strengthen the funding of many retirement plans. The strong position of occupational pension plans has reignited conversations about the role of pension plans in overall employee compensation.

Also critical to these conversations are the workforce recruitment and retention benefits that pensions provide to employers, especially in today’s tight labor market. As many as 90 percent of workers with a pension say that a pension benefit makes them more likely to stay in their job, even if a new job opportunity arises. And more than half (57 percent) of workers say they would be more likely to choose a job that offers a pension over a 401(k) plan.

surprised many last year with its decision to end 401(k) contributions and reopen the cash balance pension plan. While IBM currently stands alone in its decision to offer pensions again, other private companies could follow suit. A signal from lawmakers in Washington in favor of increasing pensions could spur other companies to take action. This would not only strengthen retirement security for working people, but could also be financially beneficial for those companies.

Pensions are the most economically efficient way to provide employees with a retirement income. This efficiency helps employees, who benefit from the bundling of lifetime and investment risks and the professional management of assets. And this efficiency also helps companies provide some level of retirement benefits at half the cost, which is good for the bottom line. Congress has an important role to play in creating an enabling policy environment that supports retirement plans. Congress’s recent interest in creating such an environment is encouraging.

So let’s leave it to dinosaur lovers to imagine the wonders of long-extinct creatures, and let’s continue to focus on supporting something that is increasingly flourishing today: the defined benefit pension plan.

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