Concepts such as final average pay and early retirement subsidies may be difficult for employees to keep track of, which in turn reduces employee appreciation. Trust Security - Security is always important. Current law contains strong fiduciary rules, but ultimately the assets of defined contribution plans are not protected against fraud or embezzlement. There are also problems with current law that the current legislative proposals do not address directly. One major problem is complexity.
Complexity creates unnecessary costs.
A cash balance plan operates like an individual account plan, but, instead of the employee choosing between different investment options, there is a fixed rate of return. Unfortunately, the underlying legal rules are somewhat complex, and this discourages the adoption of cash balance plans by small employers. A second general problem with current law in the pension area arises, in part, from our changing economy. Traditional employer-employee relationships are evolving. There is a growing use of employer leasing.