Cash Balance Interest Basis-Protected Benefit?

[Guest ak]

Is the interest crediting basis, e.g., 30 year treasury, fixed rate, etc. a protected benefit. Can it be changed with respect to already accrued benefits. For example, person terminates with plan providing a 5% fixed interest rate, can plan be amended to reduce the rate to 3% at some future date or is the 5% rate protected? How about for an active employee with respect to accrued benefit or only for future accruals?

[Blinky the 3-eyed Fish]

You would not have to protect the future crediting interest rate, but you would have to protect the accrued benefit associated with the current cash balance. It's all about protecting what is accrued. It doesn't make a difference if active or terminated.

[ak2ary]

There is a very strong arguement that you would absolutely protect the future interest credit basis for past pay credits. That is, you can divide your cash balance account into a post 2006 and pre 2007 sub accounts and preserve the interest credit basis on the pre-2007 amounts. Especially in plans that define the accrued benefit as an annuity at NRA, you can't change the interest credit basis (unless you guarantee to increase it) without potentially reducing a benefit that has already been accrued...so you can only do it with respect to future pay credits.

Looks like some relief may be given as a result of PPA but that is not clear either