Is My New Pension Plan Worth Less?
By Asa Fitch

(MONEY Magazine) – Q. My company just switched from a traditional pension plan to a cash-balance plan. Should I be worried?

A. That depends in large part on your career: The longer you've worked for your company, the better off you were with that old pension. Why? Traditional pension plans dole out benefits based on how long you've worked for a company and how much you've earned over the years--a formula that rewards long, loyal service. Loyalty is no virtue in a cash-balance plan, however, which takes into account only how much you make: You are credited with a percentage of your salary every year, and the money then grows at a set rate (say, 5%) until you retire. That's actually a better deal for a 25-year-old who has plenty of time for the money to compound; it's not so great if you're over 40. But get used to it: The number of cash-balance plans has grown by 50% in recent years and more conversions are coming. And look on the bright side: At least your employer didn't get rid of its pension plan altogether, a step that more than 100,000 companies have taken so far.

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Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer LIBOR Warning: Neither BBA Enterprises Limited, nor the BBA LIBOR Contributor Banks, nor Reuters, can be held liable for any irregularity or inaccuracy of BBA LIBOR. Disclaimer. Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.