Why Wealthy Individuals Trust This Retirement Plan for Financial Stability

Core Insights - Cash balance pensions have experienced significant growth, increasing 15-fold over the past two decades and now representing nearly 50% of all defined benefit plans [2][6] - These pensions combine features of traditional pensions and 401(k) plans, offering guaranteed returns without requiring employees to manage investments [3][5] Cash Balance Pension Overview - A cash balance pension is a defined benefit plan where employers contribute annually based on a percentage of the employee's salary, differing from traditional pensions that pay fixed benefits based on service years and retirement salary [3] - The account balance grows through employer contributions (pay credits) and interest credits, which are based on a predetermined interest rate [4][6] Growth Calculation - Pay credits are calculated as Employee Salary multiplied by Pay Credit Percentage, ensuring predictable growth in the account balance [6][7] - Interest credits are calculated as Account Balance multiplied by Interest Rate, further enhancing the account balance [7] Contribution Dynamics - Contribution amounts can increase due to factors such as pay raises, higher employer contribution rates, or age adjustments to accelerate savings as retirement approaches [8] - Upon retirement, employees can choose between a lump sum payment or converting the balance into a monthly annuity [8]