If a cash-balance pension plan isn’t right for your company, you may want to consider these other variations on the pension theme.
Retirement-bonus plan:
This is a defined-benefit plan that states the amount payable at retirement as a single sum that’s a multiple of pay. Although payable as a lump sum, it must also be offered as an annuity for life.
Pension-equity plan:
This is a defined-benefit plan in which participants receive a credit percentage for each year of service. At retirement, employees receive the product of the accumulated percentage points multiplied by their final pay.
Mobility-bonus plan:
This type of defined-benefit plan is for employers in special circumstances. No individual accounts are kept; however, it functions like a defined-contribution plan because the payment is a single sum rather than an annuity stream.
Target-benefit plan:
A type of defined-contribution vehicle that has many features of a defined-benefit plan. The purpose of this plan is to build an account that will equal a specified or “target” amount at retirement.
Personnel Journal, October 1995, Vol. 74, No. 10, p. 38.