Cash balance plan conversions conducted since 1999 increased company pension costs by an average of 2.2% in the first year after conversion, according to a new Watson Wyatt Worldwide study. "The charges that most companies convert to cash balance plans to slash costs, or that they don't protect current employees near retirement, are simply not true," said Eric Lofgren, retirement practice director at Watson Wyatt. "The vast majority of employers take great pains to protect workers during conversions." The study focused on 55 large companies that converted their defined benefit plans to cash balance plans.
An earlier study by Watson Wyatt found that companies that converted their plans before 1999 averaged savings of 1.4% in the first year after conversion.
