Cash balance comeback

April 2024

There has been recent news of a plan sponsor announcing a new cash balance provision for their active employees. This bucks the trend of the last few decades when it was common for companies to announce pension plan closures and freezing future benefit accruals.

This has resulted in many companies asking the following questions:

  • What is a cash balance pension plan?
  • Why would a plan sponsor have interest in implementing a new cash balance provision in the existing defined benefit plan?
  • Should other companies with frozen pension plans consider this approach?
  • What are some investment considerations for any cash balance pension plan?