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The recent article on the improved finances of, but poor outlook for, traditional pensions ("Company pension plans shape up, ship out," June 1) was good but did not delve far enough into solutions. It correctly noted that defined benefit plans provide better protection for working households than the current alternatives and that only high-income households have sizable nest eggs in their 401(k) or other defined contribution plans. The fact is that not only is it difficult for many people to save voluntarily, but much of the money put into 401(k) plans by low and moderate income individuals will be withdrawn early and not be available when they retire or run out quickly thereafter. There are no easy solutions. All involve some combination of mandatory employee contributions, mandatory employer contributions and mandatory annuitization of at least a part of account balances.

Annuities are relatively expensive now. With historically low interest rates, only the very healthy are choosing annuities. However, if annuities were mandatory, insurers' longevity risks would go down allowing better rates for everyone.

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It should be noted that even in sectors where employers protect their employees from longevity risks by providing defined benefit plans, we see major obstacles associated with bad governance — the greatest of these is failure to properly fund these pension plans.

Solving the retirement income problem will require hard decisions and will take leadership at the state, local and national level.

Thomas Lowman, Baltimore

The writer is chief actuary for Bolton Partners, Inc.

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