Since the 1980s, a new plan design attracted plan participants for its DC-like features, such as its account balance-type formula and benefits portability through lump sums. Fifteen years later, these cash balance (CB) retirement plan sponsorships began to surge and continues to do so in the current environment. In fact, about a fifth of defined benefit (DB) plans now include a CB benefit formula, and for many open plans, it is the part of the liability that is growing. At the same time, many corporate DB plan sponsors are embracing liability-driven investing (LDI) strategies in their efforts to preserve plan health on behalf of participants and to manage the plans’ financial impact on the sponsoring organizations.

This Russell Investments Practice Note answers how these two trends align with each other to meet plan sponsors’ risk-management objectives.

Download research