Get access to the exclusive HR Resources you need to succeed in 2018!
SHRM board member David Windley discusses how unconscious bias can derail workplace diversity efforts.
Is your employee handbook keeping up with the changing world of work? With SHRM's Employee Handbook Builder get peace of mind that your handbook is up-to-date.
Build competencies, establish credibility and advance your career—while earning PDCs—at SHRM Seminars in 12 cities across the U.S. this spring.
#SHRM18 will expand your perspective – on your organization, on your career, and on the way you approach HR. Join us in Chicago June 17-20, 2018
Cash balance “hybrid” retirement plans are continuing to replace traditional pension plans and now make up 25 percent of all defined benefit retirement plans, up from 2.9 percent in 2001, according to a report by Kravitz, a provider of retirement plan management services.
2014 National Cash Balance Research Report shows there were 9,648 active cash balance plans in the U.S. in 2012 (the most recent year for which complete IRS reporting data is available), up from 7,926 in 2011. This 22 percent increase was significantly higher than industry projections of 15 percent growth, and the number of new cash balance plans continues to grow faster than other sectors of the retirement plan market.
Cash balance plans combine the high contribution limits of traditional defined benefit plans with the flexibility and portability of a defined contribution plan (see the Department of Labor’s
Facts About Cash Balance Plans).
Other key findings from the Kravitz report include:
• Small businesses drive cash balance growth. 87 percent of cash balance plans are in place at firms with fewer than 100 employees.
• Companies more than double contributions to employee retirement savings when adding a cash balance plan. The average employer contribution to employee retirement accounts is 6.3 percent of pay in companies with both cash balance and 401(k) plans, compared with 2.6 percent of pay in firms with 401(k) plans alone.
• Actual rate of return plans gain popularity. IRS
regulations released in 2010 allow many alternatives to traditional safe harbor rates. Many larger cash balance plans are now using
"actual rate of return" to reduce investment risk for the employer.
• Regional concentration. New York and California dominate with 23 percent of all cash balance plans, while the fastest growth is occurring in Texas and Florida.
Stephen Miller, CEBS, is an online editor/manager for SHRM. Follow him on Twitter
You have successfully saved this page as a bookmark.
Please confirm that you want to proceed with deleting bookmark.
You have successfully removed bookmark.
Please log in as a SHRM member before saving bookmarks.
Your session has expired. Please log in again before saving bookmarks.
Please purchase a SHRM membership before saving bookmarks.
An error has occurred
Recommended for you
CA Resources at Your Fingertips
SHRM’s HR Vendor Directory contains over 3,200 companies