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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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.