Are cash-balance plans better for younger workers and job-hoppers?
Employers say cash-balance pension plans are better for younger and more mobile workers because these workers can build up a better benefit than under traditional pensions, and take it with them when they leave. But last year, the Government Accountability Office concluded that most workers — regardless of age — get lower retirement benefits when employers switch from traditional pension plans to cash-balance plans. What’s more, workers get nothing if they leave before they are “vested,” which usually takes five years. The GAO says more than one-third of workers in both traditional and cash-balance plans fail to vest, making cash-balance plans no better for job-hoppers than traditional pensions. (And most companies automatically cash out pensions with values below $5,000, effectively already giving young mobile workers pension portability.) What steps can I take if my pension is converted? About half of employers making the switch provide a transition period to protect older workers,
