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Cash Balance Pension

Definition of Cash Balance Pension

A cash balance pension is an employer-sponsored retirement plan that resembles defined benefit plans in some ways and defined contribution plans, such as 401(k)s, in others. As with defined benefit plans, the employer makes a contribution in each employee's name and guarantees a return, typically promising to pay interest at a rate linked to the rate being paid on U.S. Treasury bonds. Like 401(k)s, the plan is portable, which means any employee who leaves the company can move the assets that have accumulated into a rollover IRA or into a new employer's plan, if the new employer's plan allows transfers. The employee also has the option of leaving the assets in the old employer's plan, where they will continue to earn interest. Cash balance plans have advantages for younger employees since a percentage of their earnings is added to the plan each year and can compound over time. The plans also benefit employees who change jobs during their careers. On the other hand, employees who have stayed at the same job for many years and whose employer switches from a traditional defined benefit plan to a cash balance plan are likely to receive substantially less pension income from a cash balance plan than from a traditional plan. That's because traditional plans typically figure pension income based on the worker's salary in the final three to five years before retirement, when salaries tend to be highest.

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Financial Dictionary

What is Financial Dictionary?

Financial Dictionary is a dictionary or database that contains the meaning of all financial terms. Financial Dictionary has been created to help anyone, interested in understanding financial terms. It is extremely important to know what the financial terms mean when signing on terms and conditions. When availing financial products, you can be easily cheated if you don’t know what you have signed up for. To avoid this, you must be aware on what the terms really mean.

 

Who is this Financial Dictionary for?

We have developed this Financial Dictionary that could be used by anyone for free on our website. We have provided the meanings of almost all the financial terms along with the context in which they can be used. If you have lingering doubts on any financial term, then all you must do is log on to our website and check out the Financial Dictionary.

 

Why do you need to refer a Financial Dictionary?

If you wish to invest in the stock market, then it is extremely important to understand each and every term associated with it. A small misunderstanding can lead to huge losses in a matter of few seconds. It is only wise to know the meaning of all the terms before investing. The most comprehensive Financial dictionary covering all the financial terms. Brought to you by India's largest Free Financial Education company - IndianMoney.com.

 

What happens if I don’t refer a Financial Dictionary?

If you are planning to avail a Home Loan, then it is crucial for you to understand under what conditions your bank is sanctioning the loan. You must understand each and every term written on the loan agreement or else you will end up choosing a lender who charges high interest or with tough terms and conditions. To avoid this, just log on to our website and understand the meaning of financial terms with the Financial Dictionary.

 

Consequences of Misunderstanding a financial term

If you want to invest in a financial product, you must understand various financial terms. Not doing this could mean losses. Many financial intermediaries misguide you to make quick profits. You can avoid this by understanding financial terms and make smart investment decisions.

 

Uses of Financial Dictionary

If you are a Financial Advisor, then it is extremely important to stay updated on the latest financial terms. We at IndianMoney.com update all the new terms used in personal finance in the Financial Dictionary. You can refer and update yourself, to serve clients effectively. This is a double bonanza of increasing your efficiency and fetching clients more money.

 

How does our Financial Dictionary work?

Our Financial Dictionary has three main categories. First being ‘Most Searched Words’. These are the terms/words that are generally used in finance. You can just click on the words to know their meaning. Second category is ‘Recently Added Words’. These are the terms/words that are new to finance but have significance. Third being ‘You Recently Read’. If you have previously used our Financial Dictionary, then the words checked and their meaning would be displayed under this category.

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