Conversion makes sense for many employers and for most employees. All employers who maintain traditional defined benefit plans should be considering the possibility of converting to cash balance plans, particularly if their plan has a substantial surplus. Many issues need to be considered. Conversion is not for everyone. The conversion process is complicated, expensive and raises litigation risks that are difficult to quantify.
Many employers are better off continuing, freezing or terminating their defined benefit plans.
Many other employers, however, are leading the charge into the cash balance world. So many, in fact, that these plans are no longer mere novelties. Some of the largest plans in the country have made the conversion. Each situation is unique. The cost to the employer and the impact on each different category of employee should be carefully considered.