What are Cash-Balance Pension Plans and How Do They Compare?
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Keywords
Cash-Balance, Financial Sustainability, Pension Systems, Public Pension
Abstract
We offer a comprehensive explanation of cash-balance pension plans in the public sector, including a comparison to defined-benefit and defined-contribution plans. Comparisons are made with respect to design, management, costs, and long-term viability. Three important aspects of pension fund management are discussed: pension benefits and contributions, pension governance and reasons for cash-balance plan adoption, and pension funding. Four unique cases – Nebraska Public Employees Retirement System (NPERS), Kansas Public Employees Retirement System (KPERS), Kentucky Public Pensions Authority (KPPA), and Texas Municipal Retirement System (TMRS) – help to illustrate these three important points.
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