cash balance plan

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Cash Balance Plan

A pension plan that combines features of a defined-benefit plan and a defined-contribution plan. Like a defined-benefit plan, a cash balance plan guarantees the pensioner a certain benefit upon retirement. That is, the amount one receives from a cash balance plan does not vary according to the performance of some portfolio. Like a defined-contribution plan, the employer agrees to place a certain percentage of one's salary into the plan each year, and accounts are created on an individual basis. A cash balance plan can be rolled over into another account if the employee changes jobs. As a result, it is relatively popular with younger workers.

cash balance plan

A qualified employer pension plan in which the employer guarantees a contribution level and minimum rate of return.

Cash balance plan.

A cash balance retirement plan is a defined benefit plan that has many of the characteristics of a defined contribution plan.

The benefit that you'll be entitled to builds up as credits to a hypothetical account. The hypothetical account is credited with hypothetical earnings, based on a percentage of your current pay.

These plans are portable, which means you can roll them over from one employer to another when you change jobs. That makes them popular with younger and mobile workers.

But they are often unpopular with older workers whose employers switch from a defined benefit to cash balance plan because their pensions may be less than with traditional defined benefit plans.

References in periodicals archive ?
He has performed internal financial reviews and is responsible for the development of financial, HR and organization policies and procedures, corporate risk management, ownership transition plans and the implementation of a Cash Balance Pension Plan.
30, 2010 /PRNewswire/ -- Alliant Energy Corporation ("Alliant Energy") (NYSE: LNT), announced that on December 29, 2010, Judge Barbara Crabb of the United States District Court for the Western District of Wisconsin issued an order in the previously disclosed class action lawsuit against the Alliant Energy Cash Balance Pension Plan ("Plan").
Copeland, 2003, Cash Balance Pension Plan Conversions and the New Economy, Working Paper, Federal Reserve Board, October.
Or, if we're really lucky, our companies will decide to switch over to a cash balance pension plan, and older, long-term workers can look forward to receiving a whole lot less at retirement.
While public pension funds have not been particularly active in the recent surge in cash balance pension plan conversions, there are signs suggesting that some level of interest might be developing.
For example, changes in IBM's pension liability from a proposed cash balance pension plan change initially resulted in a 7 percent ($184 million) contribution to IBM's 1999 operating income, with $11.
So, for example, if your firm is moving to a cash balance pension plan, you can provide the requisite information and worksheets to guide your workers toward informed decisions.
and Merrill Lynch, as well as ERISA cash balance pension plan cases, including JPMorgan Chase & Co.
In a cash balance pension plan, an individual "account" is established for each plan participant.
HealthSouth, and Marsh & McLennan Companies, as well as ERISA cash balance pension plan cases, including JPMorgan Chase & Co.
Interestingly, although the new law provides long-awaited clarity about the legal status of cash balance pension plan designs and new guidance about the requirements for future cash balance conversions, relatively few of the survey respondents seem inclined to consider converting to cash balance plans in this new environment.