Over the years, we have heard parents and other relatives who continued to work in a large company, even if we hated it. The Reason: “Get that pension,” they told us. Today these words of wisdom have lost much of their brilliance. After two decades of reduction of personnel, mergers and displacements abroad land, more than a few companies are not to deliver a pension to retirees. Companies like GM and Ford are finding pension obligations like a millstone around their corporate necks while trying to cut costs and generate profits. In addition, workers in the new millennium are likely to change jobs four to five times or more before retirement. This makes the pension offered in a private job less important than immediate gratification of higher salary, medical care, etc., particularly for workers.

This also makes a “cash-flow plan” offer many companies a worthy retirement option to consider. At the moment, at least one in five large employers they offer. In a cash-flow plan, the employer makes annual contributions to an account on your behalf and generally generates interest Long-term treasury note rate. This is a “defined contribution” method that has advantages over the common pension plan because you can take the funds with you, after you have acquired the rights, if you go to another job. Let’s see what are the cash balance pros. For the employer, the benefit is that the risk is transferred from the company to you. If you are young, your employer’s contributions will increase from almost nothing in the early years of a pension plan to something like 5% of your salary on a cash balance plan. And you can probably keep your account balance when you his next step in his professional career. Not a good idea for people close to retirement. In this situation, the company is making increasing contributions to its pension plan as the retirement date approaches. A cash balance plan can allow for a much lower contribution. Some companies allow all employees to choose between the new cash balance plan and the previous pension. Others give a contribution of fixed amount for long-term employees. There are many other considerations. The key is that many employees do not realize that a cash balance plan is available at your workplace. Your human resources director should be able to provide all the details.