No, it’s not a cash balance plan. EFI, an actuarial firm in DC, has proposed what it call a “Double DB” which replicates the funding scheme in a DC plan but within a traditional DB plan. The Double DB two tiers:
• a regular DB, which should be fully funded; and
• a “Partner DB,” which is funded based on past performance.
Money is contributed by the employer and employees, with half going equally into each plan the first year. Thereafter, if the Partner DB underperforms, more money goes into it; if it outperforms, less money goes into it. Mortality rates could also affect the funding. All assets would be managed in a single trust.
DC plans require funding every year (unlike DB plans) and this arrangement would prevent employers from taking a holiday on funding.
Interesting concept. What do you think?
