cash balance scheme

A type of scheme in which a percentage of salary is set aside each year for each member. The employer undertakes to ensure that each annual contribution willgrow by a specified amount which is linked to prevailing interest rates. At retirement, the member's minimum accumulated fund will be determined by the specifiedminimum rate of growth for each contribution. It may bear no relation to levels of pay and it may be considerably higher than theminimum, if investments have been successful.