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Pension Plan Design: An Update on Cash Balance and
Other Hybrid Plans
With a flurry of recent regulatory activity relating to cash balance and other hybrid plan designs, volatile marketplace conditions and the acceleration of global accounting convergence, defined benefit (DB) plan sponsors continue to face a changing pension landscape.
Proposed IRS regulations to implement the Pension Protection Act of 2006 (PPA) requirements for hybrid plans could create new flexibility and challenges. Additionally, global accounting standards might be adopted much sooner than anyone expected, resulting in significant changes to the way U.S. plan sponsors account for pension benefits on their financial statements.
On May 14, Watson Wyatt hosted a Web conference to help employers learn more about the current environment for pension plan design, with a particular focus on cash balance plans. The discussion highlighted plan design issues and opportunities and provided an integrated look at how recent regulatory developments could affect DB plans. Specifically, we addressed:
- How might the IRS’ proposed guidance on applying the PPA affect hybrid plans?
- Which plan design strategies can help plan sponsors navigate today’s dynamic environment and better prepare for the future?
- What are the key planned and proposed accounting changes and how will they affect hybrid (and traditional) pension plans?
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