title: Your organization should consider a cash-balance pension plan.
abstract: In recent years, a growing number of healthcare organizations have dropped the traditional defined-benefit pension plan and adopted cash-balance pension plans. A cash-balance pension plan generally allows employers to pay less in overall pension benefits and administration costs. A cash-balance pension plan pays benefits according to a predetermined formula based on an average of the employee's annual salary over his or her length of service. This provides recognizable benefits to younger employees but lower overall benefits to employees who have a long length of service. To assuage employees who may feel cheated out of the pension benefits they expected, employers that change to a cash-balance pension plan should consider offering higher guaranteed growth rates, advanced notification of the change to the new plan, and generous early-retirement options for employees with longer lengths of service.
authors.affiliation: School of Accountancy, Auburn University, Alabama, USA. godwin@business.auburn.edu
authors.forename: N H
authors.initials: NH
authors.lastname: Godwin
authors.forename: K G
authors.initials: KG
authors.lastname: Key
mesh_terms: D003142:Communication; D005376:Financial Management / Q000191:economics*; D007588:Job Satisfaction; D009936:Organizational Innovation; D010415:Pensions; D012179:Retirement / Q000191:economics; D012456:Salaries and Fringe Benefits; D014481:United States