If Congress has its way, companies that are converting their traditional pension plans to cash balance plans will soon have to give employees more of the details. The Pension Right to Know Act of 1999, sponsored by Sen. Daniel Patrick Moynihan (DN.Y.), would require individualized estimates of the impact of a conversion if the pension plan has more than 1,000 participants.
More than 500 firms, including IBM Corp. and MCI WorldCom Inc., have changed to cash balance plans, which are considered more flexible and portable, but could lead to reduced future benefits, especially for employees nearing retirement.
Critics argue, though, that the disclosure would be overkill. “There is the potential for overload,” says Larry Sher, a principal at PricewaterhouseCoopers LLP. “Most companies are already effectively communicating the effects of the changes to employees”