The first cash balance (CB) plans emerged in the 1980s. This new plan design attracted plan participants for its DC-like features, such as its account balance-type formula and benefits portability through lump sums.

This paper address how these two trends align with each other to meet plan sponsors’ risk-management objectives:

  1. Over the last 25 years, these CB retirement plan sponsorships have surged. In fact, about a fifth of defined benefit (DB) plans now include a CB benefit formula, and for many non-frozen plans, it is the part of the liability that is growing.
  2. At the same time, most corporate DB plan sponsors embrace 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.
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