Trump’s tax cuts in 2017 helped decrease risks for pension plans

When pension plans pay pre-defined benefits to retirees, the responsibility for funding future benefits falls primarily on the company sponsoring the plan. The large and unpredictable contributions needed for defined-benefit plans act as a constraint on sponsors’ investment activities, and underfunding often occurs. This has been driving an increasingly vocal conversation on de-risking these plans. Divya Anantharaman, Saipriya Kamath, and Shengnan Li analyse how Donald Trump’s Tax Cuts and Jobs Act of 2017, one of the most dramatic changes to the US tax landscape in decades, has served as a driver of pension de-risking.