The coordination of a pension plans’ benefits, contribution and investment policies is essential to building a strong pension system, said Bill Hallmark, consulting actuary at Cheiron Inc., during a recent webinar hosted by the National Institute on Retirement Security.

“The basic fundamentals of the pension system haven’t changed. Employee and employer contributions go into the pension fund along with investment earnings, then benefits and expenses are paid out, regardless of the [type of] retirement plan. Over time the contributions plus the investment earnings have to equal the benefits and expenses. You can increase contributions to improve your funded status.”

Some of the trade-offs plan sponsors have to think about when developing their benefits policy include balancing the cost versus the benefit, employee demographics and whether they’re trying to address full-time career employees or cater to mobile short-tenure employees, said Bonnie Rightnour, consulting actuary at Cheiron.

Read: FSRA opens consultation on proposed pension benefits guarantee fund guidance

“In order for benefits to be higher, you have to increase contributions........

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