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Cash-balance plans could provide added retirement security 2010-04-16 A little-known type of retirement plan may soon become more prevalent on the savings scene. Cash-balance plans, as they are called, are a type of defined-benefit plan - otherwise known as a pension. As such, cash-balance plans are insured by the Pension Benefit Guaranty Corp. If a person's employer can't make good on its pension obligations, the shortfall is met by the PBGC. MarketWatch writes on the cash-balance trend this week, noting that the plans effectively guarantee a payout to participants. Employers, the financial news site says, establish "a guaranteed rate at which the participant's money will grow." And cash-balance plans can't go down in value, from a participant's perspective - a selling point that could be particularly valuable for risk-averse retirement savers. By and large, the investment market is becoming more risk-tolerant: A Bank of America survey of fund managers found that many more are investing in the stock market than was the case a few months ago. But individuals charged with saving for retirement may want to avoid risk as much as possible. For them, a cash-balance plan can make sense - if it's offered by their employer, that is.  |
