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Besides pension and social security, you have your own nest egg

If the company you work for has a pension plan, how much do you know about it? And how much do you know about changes in the United States pension system that could affect the kind of income you have at retirement?

Changes in the pension system, and a new view of the purpose of the corporate pension fund, are forcing more Americans to make themselves aware of their pension plans and figure out ways to supplement those pensions and social security payments.

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By several indicators, the US retirement system - both private and public - is fairly sound. Changes made by Congress and the Reagan administration last year are expected to keep the social security system solvent into the next century - if the economic projections are correct. And although the number of private pension plan terminations (where a plan is liquidated and usually redesigned, if the company stays in business) continued to rise (to 6,400) in the 1983 fiscal year that ended Sept. 30, the pace of terminations was slower than the previous three years, according to the Pension Benefit Guaranty Corporation, the federal agency that insures defined-benefit pension plans.

The agency expects to see fewer terminations this year and even fewer next year, as companies gain strength in the recovery, spokesman Peter A. Kirsch says.

As for maintaining benefits to those already retired, a recent study by Hay Management Consultants of Philadelphia found that during the recession, companies did not cut benefits for such things as life and health insurance or pension payments.

Still, the opening of individual retirement accounts (IRAs) to all workers in 1982 was more than a gift from Congress; it was a logical next step in a process that began several years earlier to put more of the responsibility for sufficient retirement income on the individual and less on the employer.

''In the last seven or eight years, we've seen Congress make numerous changes in the law that made so-called defined-contribution plans more attractive,'' says Dallas L. Salisbury, executive director of the Washington-based Employee Benefit Research Institute (EBRI).

With a defined-contribution plan, an employee can choose how much money - either a part of one's pay, a contribution from the employer, or a combination of the two - he or she wants to put into the retirement fund. With the more traditional defined-benefit plan, the employer simply guarantees a certain income, or pension, at retirement.

''In a defined-benefit plan,'' Mr. Salisbury explained, ''all the risks are absorbed by the employer.'' Changes in the national economy, investment performance, or the company's fortunes are not supposed to affect the pension plan or payments to already-retired employees.

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''But in a defined-contribution plan, all these risks are absorbed by the individual,'' he continued.

While all this is going on, the traditional corporate pension fund is facing pressures of its own. The stock market rush that began in August 1982 acted like a giant tire pump on these funds, rapidly inflating the value of their portfolios. Suddenly corporate America, including many companies still strapped for cash, is taking a good look at all that ''excess''money.

If a company could find a way to use this bounty, the executives feel, they might be able to make much-needed capital improvements to strengthen the company , or even keep it going. One way to get at the money is to terminate the pension plan, take whatever is needed to start a combination defined-benefit/contribution plan for current employees, continue existing benefits for retirees, and use the excess for the company. At some companies this ''recaptured'' excess might amount to a few million dollars; at others it might be a few hundred million.

The list of companies that have gone this route include giants like the Great Atlantic & Pacific Tea Company (which expects to recapture $275 million), Harper & Row Publishers Inc. ($9 million), and AMAX Inc. ($100 million).

The terminations have attracted the attention of Congress, which is expected to consider the matter this year or next. Some in Congress see terminations as a tax-avoidance ploy, by which companies build up cash reserves tax-free. Others feel any excess money should be saved for those times when the stock market is not so rewarding.

Whatever the outcome of these changes, they are a few more arguments for individual effort to save for retirement, including an overall evaluation of retirement income sources and options.

Fortunately, says John Dirlam, principal with Towers, Perrin, Forster & Crosby, a benefits consulting firm, ''people are not complacent about their retirement.'' Despite congressional steps to patch up the social security system , Mr. Dirlam notes, surveys have shown that over half of the Americans under the age of 40 expect to receive nothing from it when they retire.

''The social security system is nothing more than an intergenerational chain letter,'' he argues. ''And to some extent, this applies to the corporate pension system, too.''

Dirlam is encouraged by the fact that more than 20 million Americans have put some $100 billion in IRAs. Also, he says, most employees who have a choice of investment alternatives in a company-sponsored retirement savings plan, like a 401(k), put the majority of their money in a more conservative fixed-income option, rather than a mutual fund.

The ''ideal situation,'' Mr. Salisbury at EBRI says, would be a combination of a defined-benefit plan, a defined-contribution plan, and individual savings, such as an IRA. The proper balance depends on several factors, including how long you plan to stay with a particular employer.

''If you change jobs every three or four years,'' Salisbury says, ''you should put more emphasis on your own savings. But for an individual who's more than happy spending 35 years with the government or a big company, then more emphasis can be put on the traditional pension.''

If you would like a question considered for publication in this column, please send it to Moneywise, The Christian Science Monitor, One Norway Street, Boston, Mass. 02115. No personal replies can be given by mail or phone. References to investments are not an endorsement or recommendation by this newspaper.

Next week: Changes expected in small-business pension plans

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