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Converting traditional pensions plans to cash balance plans: Should you do it?
Author(s) -
Hurtt David N,
Kreuze Jerry G,
Langsam Sheldon A
Publication year - 1999
Publication title -
journal of corporate accounting and finance
Language(s) - English
Resource type - Journals
eISSN - 1097-0053
pISSN - 1044-8136
DOI - 10.1002/(sici)1097-0053(199923)11:1<35::aid-jcaf3>3.0.co;2-k
Subject(s) - balance (ability) , pension , plan (archaeology) , cash , business , loyalty , checklist , pension plan , finance , accounting , actuarial science , marketing , psychology , neuroscience , archaeology , cognitive psychology , history
Converting your firm's traditional pension plan to a cash balance plan will reduce pension expense. It will also help you attract younger, more mobile employees, since the plan is portable. But you'll be penalizing older employees for their loyalty to the company. Instead of receiving their traditional pensions, they'll end up with smaller ones. Some may even sue the company. So should you convert? The authors discuss the complex issues involved, and provide a checklist to help you decide. © 1999 John Wiley & Sons, Inc.