Finance

Cash Balance Pension Plans

by | February 1, 2014

A cash balance plan is a common type of hybrid pension plan. Like a Defined Benefit plan, contributions from employees and employers are pooled and professionally managed. But the benefits employees actually get is based on the amount accumulated in the account (not on a formula based on salary and years of service). Employers guarantee a minimum rate of return, though the payout is likely to yield lower yearly returns than a traditional pension plan. This model helps reduce and manage future liability for the employer.

Return to glossary

Join the Discussion

After you comment, click Post. You can enter an anonymous Display Name or connect to a social profile.

More from Finance