Federal Housing Finance Agency (FHFA) Acting Director Edward J. DeMarco released a statement saying the agency directed the organizations to terminate their defined benefit pension plans as of December 31, 2013. “Terminating the defined benefit retirement plans eliminates risk to Fannie Mae and Freddie Mac and helps to conserve their assets on behalf of taxpayers, one of our main priorities as conservator,” he said.
DeMarco noted that the plans were already closed to new entrants. Pension plan participants will be able to elect an annuity or a lump sum payment they can then roll over into an individual retirement account (IRA) or 401(k), the statement said. “Freddie Mac and Fannie Mae will continue to provide competitive benefits for their employees through their defined contribution plans,” DeMarco added.
In response to the announcement, National Public Pension Coalition Executive Director Jordan Marks said: “Pensions are a critical leg of the retirement security stool, and we do a great disservice to retirees when we eliminate these systems. At a time when the country is facing an unprecedented retirement crisis, we ought to pursue policies that enhance retirement security for all Americans—not policies that threaten to retire a generation of workers into retirement.”