One of the nation’s leading pension administration services companies is expanding to offer record keeping services for cash balance plans or “hybrid” pension plans.
Dorsa Consulting has assembled a highly qualified team that will lead efforts in this new service offering. As part of the record-keeping system, Dorsa offers companies a Website and toll-free 800 number where cash balance participants can access personal benefit data and general plan information, obtain benefit calculations for planning purposes, request benefit payments and maintain and update their personal data.
“We’re seeing a large number of companies begin offering cash balance plans to their employees and we’re excited to offer a full array of services to help companies educate their employees on this type of benefit,” said John McCrary, CRA, CRC, principal and managing partner of Dorsa Consulting. “We help companies sort through any possible confusion that may come in transitioning from defined benefit plans to cash balance plans, which are growing nationwide in popularity.”
Dorsa Consulting will also mail annual benefit statements, Summary Annual Reports and other required notices to cash balance plan participants, process benefit calculations and payments for retirees and employees who leave prior to retirement age and maintain plan participant data.
Cash balance plans are sometimes called “hybrid” plans because they share some characteristics of both defined benefit plans and defined contribution plans. Specifically, cash balance plans promise to pay a specific or defined benefit upon retirement while providing an account balance for each participant based on amounts credited or allocated to the account by the plan sponsor, which is known as a defined contribution.
Here’s how cash balance plans work: Employers contribute a percentage of their employee’s pay into hypothetical accounts and credit the interest to those accounts at a rate or index of rates set by the employer. Employees receive periodic statements outlining their accumulated pay and interest credits. However, because the employer promises to pay the account balance, the benefit is defined and insured by the Pension Benefit Guaranty Corporation; the plan is regulated like a traditional defined benefit plan.
“Studies show that with today’s mobile work force, with people having more and more job changes before retirement-age, cash balance plans are beneficial, particularly among workers who tend to move in and out of the work force often to take care of their families,” McCrary said. “We see this as one of the predominant trends in our field in the coming years.”
With revenues in excess of $1.5 million, Dorsa Consulting currently provides pension plan administration support to more than 75 professional firms that represent more than 500 plans, as well as to more than 250 individual plan sponsors.
About Dorsa Consulting
Dorsa Consulting (dorsaconsulting.com), founded in 1994 as Lorraine Dorsa and Associates, provides pension administration and actuarial services. Its services range from plan design, consulting, actuarial, non-discrimination testing and administration services for all types of plans.