Actuaries Expect Cash Balance Plans to Surge

Actuaries expect the number of cash balance plans they administer to increase by 2,100 this year, a 37% increase from the 5,600 plans they currently administer, according to the ASPPA College of Pension Actuaries. 

This is in line with the 31% surge in cash balance plans in 2013 that Kravitz previously observed.

Fifty-five percent have dealt with a plan termination and cash balance restart in the past five years, 11% have dealt with 10 to 20 of these occurrences, and 3% have dealt with more than 20.

Forty percent of the actuaries surveyed said they have worked with a fixed-income credit, while 17% said none of the cash balance plans they serve have a fixed-income credit. Sixty-two percent said none of their plans provide in-service distributions, 64% said their plans use a fixed interest rate for annuity conversions, and 39% said their plans use a segment rate for annuity conversions.

“ACOPA actuaries support a large and rapidly growing constituency of cash balance plans,” says Andrew Ferguson, a member of the ACOPA Leadership Council. “Our most recent survey maps the design directions this constituency is taking.”

They survey was conducted among 128 actuaries in the summer of 2014.