While this has a particular technical meaning as far as the IRS is concerned, a look at Chart A is one way to show this conceptually. The chart shows how much annuity, beginning at age 65, the value of each accrual will buy. Opponents of cash balance plans point to this falling line to argue the plans discriminate against workers as they get older. Proponents point out, however, that the rate of benefit accrual as defined by contribution credits for a typical cash balance plan stays level year after year. Because the rate stays the same as an employee gets older, there is no discrimination.
All employees get the same percentage of pay set aside their accounts.
This is, of course, an absurd result, but it would be the logical extension of accepting the argument of cash balance opponents. Here it's clear that the value of the accruals in the cash balance plan are greater for younger workers than under the traditional plan. The chart illustrates why many younger works like cash balance plans which can provide more for workers who change jobs and take their account balances with them. If the new account balance is less than the value of the accrued benefit, the employee has to work for some period to make up the difference. Indeed, many younger workers may not experience any wear-away at all.