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 ?
Current employees will maintain traditional pension coverage, while new hires will get a cash balance pension plan and an enhanced 401(k) savings plan that protects them if they change employers.
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.
Final regulations for acceptable ways employers can add interest to employees' cash balance pension plan accounts were listed as a priority in the agency's 2011 through 2012 Priority Guidance Plan.
A cash balance pension plan is a qualified defined benefit plan that provides for annual employer contributions at a specified rate to hypothetical individual accounts that are set up for each plan participant.
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.
announced the addition of 2012 Cycle A Cash Balance Pension Plan Documents (http://www.
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.
In a cash balance pension plan, an individual "account" is established for each plan participant.