Companies also wanted a system that offered better benefits to a generation of workers who switched jobs more frequently than their parents. The traditional pension plan very much hurt the mobile employee. New plans, new worries Enter, the cash-balance plan. By contrast, cash-balance plans build benefits in steps. Credits are earned at a steady pace each year over the life of an employee's career.
Younger workers build up benefits faster.
The catch, though, is that you often need to stay with a company at least five years before you can receive any pension benefits. Older employees may find that their top earning years no longer translate into chunky pension checks. Some folks who have spent years on the job could see their pensions drop by 20 percent or more once a company switches plans. This has led to claims of age discrimination and investigations by the Internal Revenue Service, the Equal Employment Opportunity Commission and the Labor Department. But older employees aren't always worse off, particularly if their employer allows them to earn benefits under the old plan for a few more years, or if the employer allows existing employees to choose which plan they want.