We heard through the years from parents and other relatives to stick with a job with a large company even if we hated it. The

reason: “Get that pension,” we were told.

Today those words of wisdom have lost much of their luster. After two decades of downsizing, mergers and relocation to foreign

lands, more than a few companies are not around to deliver a pension to retirees. Companies like GM and Ford are finding their

pension obligations as a millstone around their corporate necks as they try to cut costs and generate profits.

Also, workers in the new millennium are likely to change jobs four or five times or more before retirement. That makes the pension

offered at a particular job less important than the immediate gratification from higher pay, healthcare, etc., particularly for

younger workers.

That also makes a “cash balance plan” offered at many companies a retirement option worth considering. Right now at least one

in five big employers offer them.

In a cash balance plan, the employer makes annual contributions to an account in your name, and it usually earns interest near the

rate of long-term Treasury notes. This is a “defined contribution” method that has advantages over the common pension plan

because you can take the funds with you, after you’re vested, if you go to another job. For the employer, the benefit is that the risk

is transferred from the company to you.

If you’re young, your employer's contributions will increase from next to nothing in the early years of a pension plan to something

like 5% of your salary in a cash balance plan . And you'll probably be able to take your account balance with when you leave for

your next step up the career ladder. It’s not as good of an idea for folks close to retirement. In that situation, the company is making ever greater contributions to your

pension plan as you near the date of retirement. A cash balance plan may allow for a much lower contribution.

Some companies allow all of their employees to choose between the new cash-balance plan and the old pension. Others give an

additional lump-sum contribution to longtime employees.

There are many other considerations. The key is that many employees don’t realize that a cash balance plan is even available at

their workplace. Your human resources director should be able to provide all the details.

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