How do Cash Balance Plans Affect the Pension Landscape?

Employee Power in Conversions to Cash Balance Plans: Union, Public, and Electronic Voice

Journal of Collective Negotiations (formerly Journal of Collective Negotiations in the Public Sector) ◽

10.2190/u2jk-cfc3-cd9b-xy0r ◽

2000 ◽

Vol 29 (4) ◽

pp. 273-282

Keyword(s):

Cash Balance

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Peregrine—Twenty Years of Fraudulent Cash Balances

Issues in Accounting Education ◽

10.2308/iace-50690 ◽

2013 ◽

Vol 29 (2) ◽

pp. 337-348

Author(s):

Randal J. Elder ◽

Diane J. Janvrin ◽

Paul Caster

Keyword(s):

Information System ◽

Chief Executive Officer ◽

Accounting Information ◽

Chief Executive ◽

Cash Balance ◽

Accounting Information System

ABSTRACT In July 2012, Peregrine Financial Group filed for bankruptcy following the discovery that $215 million in customer balances had been embezzled. Investigation revealed that its Chief Executive Officer, Russell Wasendorf, Sr., fooled auditors and regulators for 20 years by preparing fictitious bank statements and cash balance confirmations to hide the theft of cash. The fraud was uncovered when Peregrine's regulator, the National Futures Association (NFA), demanded that Peregrine participate in an electronic confirmation process for verification of customer accounts. This case discusses how the fraud was allowed to go undetected for 20 years, the importance of auditing cash, and how new electronic confirmation technology improves the ability to authenticate confirmation responses. The case is suitable for use in both auditing and accounting information system courses.

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The Cost and Duration of Cash-Balance Pension Plans

Financial Analysts Journal ◽

10.2469/faj.v57.n6.2493 ◽

2001 ◽

Vol 57 (6) ◽

pp. 50-62 ◽

Cited By ~ 4

Author(s):

David T. Brown ◽

Philip H. Dybvig ◽

William J. Marshall

Keyword(s):

Pension Plans ◽

Cash Balance ◽

The Cost ◽

Cash Balance Pension Plans

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Reforming Teacher Pension Plans: The Case of Kansas, the 1st Teacher Cash Balance Plan

Education Finance and Policy ◽

10.1162/edfp_a_00354 ◽

2021 ◽

pp. 1-48

Author(s):

Robert M. Costrell

Keyword(s):

Cost Reduction ◽

Pension Plans ◽

Average Salary ◽

Cash Balance ◽

Surface Appearance ◽

Risky Assets ◽

Retirement Accounts ◽

Employer Contribution ◽

Loaded Structure ◽

The Cost

Abstract The ongoing crisis in teacher pension funding has led states to consider various reforms in plan design, to replace the traditional benefit formulas, based on years of service and final average salary (FAS). One such design is a cash balance (CB) plan, long deployed in the private sector, and increasingly considered, but rarely yet adopted for teachers. Such plans are structured with individual 401(k)-type retirement accounts, but with guaranteed returns. In this paper I examine how the nation's first CB plan for teachers, in Kansas, has played out for system costs, and the level and distribution of individual benefits, compared to the FAS plan it replaced. My key findings are: (1) employer-funded benefits were modestly reduced, despite the surface appearance of more generous employer contribution matches; (2) more importantly, the cost of the pension guarantee, which is off-the-books under standard actuarial accounting, was reduced quite substantially. In addition, benefits are more equitably distributed between short termers and career teachers than under the back-loaded structure of benefits characteristic of FAS plans. The key to the plan's cost reduction is that the guaranteed return approximates a low-risk market return, considerably lower than the assumed return on risky assets.

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