ARLINGTON, VA – A recent survey of hybrid plans by the ASPPA College of Pension Actuaries (ACOPA) suggests substantial increases in new cash balance plan adoption.
Cash balance plans or CB plans are occasionally referred to as hybrid plans due to the fact that they’re a defined benefit plan with defined contribution plan characteristics.
Conducted during the summer of 2014, the survey yielded responses from 128 actuaries who currently work with more than 15,000 defined benefit and CB /hybrid plans. The actuaries surveyed said they anticipated 2,100 new cash balance plans on top of a current base of 5,600 plans administered.
More than half (55%) of respondents had dealt with a plan termination and cash balance restart in the past five years. About one in 10 (11%) had dealt with 10-20, while 3 percent of respondents had dealt with more than 20;
“ACOPA actuaries support a large and rapidly growing constituency of cash balance plans – over 5,600 cash balance plans currently,” said Andrew Ferguson, a member of the ACOPA Leadership Council. “Our most recent survey maps the design directions this constituency is taking, as the industry absorbs and reacts to ongoing regulatory guidance. We are pleased to continue to monitor these trends in this second ACOPA cash balance plan survey.”
Among the survey’s other findings:
- 40% said all the CB plans they worked with had a fixed income credit (just 17% said none used the fixed income credit);
- 77% used 5 percent as that fixed income credit;
- 62% said none of their plans provided in-service distributions;
- 64% said that their plans “mostly” used a fixed interest rate (e.g., 5 percent) for annuity conversion;
- 39% said the majority of their plans used a segment rate for annuity conversion.
About ACOPA: The ASPPA College of Pension Actuaries (ACOPA) is part of the American Retirement Association. ACOPA is responsible for identifying and addressing the professional development needs of the organization’s actuarial membership, preparing formal comments, position papers, and other relevant pronouncements involving federal regulatory authorities and standard setting bodies, and carrying out ASPPA’s responsibilities as one of the recognized U.S.-based actuarial organizations.
Media Contact: Don Jackson, (703) 516-9300 Ext. 169, [email protected]