Cash Balance Plans Outpace Traditional DB Plans
Cash balance plans largely make up all defined benefit (DB) plans, finds new research from October Three.
The 2026 Cash Balance Plan Report shows that cash balance plans comprise of 65% of all DB plans in the U.S, at 24,898 compared to 13,571 traditional DB plans. Between 2015 and 2024, the number of cash balance plans grew by nearly 70%, while the number of traditional DB plans fell by over 50%.
Of all accruing plans today, 69% are cash balance and only 31% comprise of traditional DB.
Traditional DB plans have largely decreased in number over the past years, as employers look to save costs and reduce administrative burden. Plan sponsors were also likely to implement cash balance plans with market-based interest crediting rates, at 53% of all employers, compared to 36% of companies who use flat rate plans. This is because market-based interest crediting rates have low volatility and generally carry lower contribution and investment risk compared to fixed-rate counterparts, reports October Three.
Further, proposed FASB accounting changes for market-based plans will likely attract more employers to the benefit in coming years, the firm predicts.
“Cash Balance plans, and in particular Market Based Cash Balance plans, have experienced extraordinary growth over the past decade,” said Jeff Stevenson, CEO of October Three. “We’ve seen a huge interest among firms, both professional service firms and larger corporations, in setting up cash balance plans for their businesses. Market based plans are by far the most popular because they carry the least amount of risk since they align liabilities to assets and provide a ‘DC’ experience to participants. They are also the least burdensome for employers to administer. We expect this trend to continue for a long time.”
Despite the increase in cash balance, more participants are still enrolled in traditional DB plans. According to October Three, the number of total participants in DB plans is 9.3 million, compared to 8.8 million for cash balance plans. DB plans have a larger proportion of retirees than active or deferred participants, while cash balance plans “are more evenly split and tend toward active participants,” reports October Three.
Amanda Umpierrez is the Managing Editor of 401(k) Specialist magazine. She is a financial services reporter with nearly a decade of experience and a passion for telling stories and reporting news. She is originally from Queens, New York, but now resides in Denver, Colorado.