In cash balance pension funds employers typically make a hypothetical contribution to an employee's retirement account equal to a percentage of that employee's annual salary and credit the employee's pension account with annual interest earnings based on a reference interest rate, such as the U.S. treasury bond rate.

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In cash balance pension plans, employers contribute a set percentage of employees' annual salaries to their pension accounts and credit these accounts with interest earnings, often tied to a reference rate like the U.S. Treasury bond rate, making the description accurate.

In Cash Balance Pension Funds Employers Typically Make a Hypothetical