Another Hybrid Pension Proposal
A state legislative committee is looking at a hybrid pension plan for (newly hired) public workers in California but it differs from the hybrid proposed by Gov. Brown. The Brown plan was a mix of a (reduced) defined-benefit plan and a defined-contribution plan. The alternative being considered is a mix of a (reduced) defined-benefit plan and a “cash balance” plan. A cash balance plan is similar to defined contribution but it guarantees a fixed rate of return. That means, the employer and/or employee must adequately fund the plan so it meets the guarantee. The higher the guaranteed return, the greater…
