I have been loyal to the company. If it fails, I fail. D.C. She noted that many companies have not explained what is happening. Firms are required to notify workers when they change a pension plan, but the complex technical nature of pension calculations often makes the explanations incomprehensible to most people. In recent years, more than 300 companies have switched to cash-balance pensions, in which the firm makes annual contributions and the money builds up at a specified interest rate.
Companies argue that cash-balance plans are needed to attract young workers in an era of mobility.
They can leave the company and take the cash out of the account, rather than have it remain untouched until they turn 65. Older workers, by contrast, enjoy the benefits of the traditional pension, which has its rapid build-up in the last 10 years of a career. Many of the affected workers had expected to retire in their 50s with full pension benefits after a 30-year career. They may never catch up to what they would have gotten under the old plan. IBM first imposed its new cash balance plan in May, declaring that workers 50 and older, those within five years of retirement, could stay in the old plan.