Only a minority of the largest U.S. employers now offer a defined-benefit pension plan to new salaried employees, according to a study released Monday, May 11.
As of last week, 45 percent of Fortune 100 companies offered a defined-benefit plan to new salaried employees, according to Arlington, Virginia-based Watson Wyatt Worldwide. That’s down from 49 percent in 2008 and 83 percent as recently as 2002.
Employers are phasing out traditional defined-benefit plans and hybrid plans, which combine elements of defined-benefit and defined-contribution plans, but legally are defined-benefit plans.
For example, 22 Fortune 100 companies offered a traditional defined-benefit as of last week to new employees, down from 24 in 2008 and 30 in 2006.
Similarly, 23 Fortune 100 companies offered hybrid plans—mostly cash-balance plans—to new employees as of last week, down from 25 in 2008 and 28 in 2006.
By contrast, the percentage of Fortune 100 companies only offering defined-contribution plans has soared. Fifty-five of the Fortune 100 offer only a defined-contribution plan to new salaried workers.
As recently as 2002, the number offering only defined-contribution pension plans was 17.
While employers have been moving away from defined-benefit plans for the past couple of decades, they could enjoy a modest rebound eventually, said Alan Glickstein, a senior retirement consultant in Watson Wyatt’s Dallas office.
That rebound could occur down the road when employers again have to more vigorously compete for talented employees, he said.
Filed by Jerry Geisel of Business Insurance, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.
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