Cash Balance Plans

We heard over the years from parents and other family members to stick with a job at a big company, even if we hated it. The

reason: "Get that retirement," we were told.

Today those words of wisdom have lost much of their luster. After two decades of downsizing, mergers and move to abroad

country, more than a few companies have failed to deliver to retirees. near a pension Companies like GM and Ford have their

pension as a millstone around their necks corporate as they try to cut costs and generate profits.

Even workers in the new millennium are probably four or five times or more before retirement change of job. That makes the pension

offered at a particular job less important than the immediate gratification of a higher wage, health care, etc., especially for

younger workers.

This also makes a "cash balance plan" offered by many companies a retirement option worth considering. Now at least one

in five large employers offer them.

In a cash balance plan, the employer makes annual contributions to an account in your name, and usually earns near the

rate of long-term Treasury notes. This is a "defined contribution" method advantages over the common pension scheme

because you can take, after you unconditionally, if the money you for another job. For the employer, the advantage is that the risk

is transferred from the company to you.

If you are young, will increase from almost nothing in the early years of a plan for something the contributions from your employer

as 5% of your salary in a cash balance plan. And you'll probably be able to bring your balance when you leave for

your next step on the career ladder.
It's not as good of an idea for people close to retirement. In that situation, the body that increasingly contribute to your

pension when you near the date of retirement. A cash balance plan can provide a much lower contribution.

Some companies may all their employees to choose between the new cash balance plan and the old plan. Others give a

additional fixed contribution to old employees.

There are many other considerations. The important thing is that many employees do not realize that a cash balance plan is also available at

their workplace. Your human resources manager should be able to provide all the data.

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