Even though he's relatively satisfied with SAP America's cash-balance plan, for example, White says that the company would switch to a DC plan if PBGC premiums get high enough. High enough, he suggests, is when providing a generous 401(k) match is a more sensible use of funds than bailing out imprudent plan sponsors.
While he hopes the act will push such employers to live up to their obligations, "I don’t see it," the finance chief says. "It's too easy for top executives to get bonuses by slashing pensions."
Another barrier to conversions from DB plans to cash balance plans is the toll they can take on certain employees. "If defined-benefit plans are volatile and you want to move that volatility, those risks don’t go away," says Joel Rich, a senior vice president with The Segal company, a benefits consulting firm. "They're just going to be shouldered by the employees."
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