Question

Many older companies have changed from a defined-benefit plan to a(n) ________, which is a retirement plan where workers are credited with a percentage of their pay each year, plus a predetermined rate of interest. Question 23 options: funded pension plan cash balance plan unfunded pension plan percentage plus inflation plan None of these

Answer 1

Cash balance plan is a retirement plan where workers are credited with a part of their pay annually and a predetermined rate of interest.

What is a Cash balance Plan?

A defined-benefit pension plan with a lifetime annuity option is referred to as a "cash balance pension plan."

What are some features of Cash balance plans?

• Based on defined-benefit needs, the financing caps, funding requirements, and investment risk are established.
• Like a defined-contribution plan, this type of plan is managed on an individual account basis.
• The advantage of these programs is that age-based contribution caps are available.
• Pretax contributions enable those 60 and older to save significantly more money each year than younger people.

You can learn more about defined pension plans work using the following link:

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