The combined value of U.S. employer-sponsored retirement plans in eight industries, as measured by percentage of pay employers are contributing, declined 19 percent to 6.36 percent from 7.88 percent of pay for the 10-year period ended December 31, 2008, according to an analysis by Towers Watson & Co.
A 53 percent drop in the value of defined-benefit plans fueled the overall decline, with DB contributions slipping to 1.99 percent of pay from 4.19 percent in 1998. That decrease was somewhat offset by a 38 percent increase in defined-contribution plan value, with contributions rising to 3.99 percent of pay in 2008 from 2.89 percent in 1998.
Among the industries analyzed, retail and wholesale contributions were down 33 percent for the 10-year period; manufacturing, down 29 percent; energy, natural resources, gas and electric, down 24 percent; pharmaceuticals, down 13 percent; high tech, down 10 percent; financial services, down 9 percent; health care, down 4 percent; and services, up 3 percent.
“Companies now are giving their employees less retirement value than they were before,” said Kevin Wagner, Towers Watson retirement practice director, in a telephone interview. “It’s a redistribution of value of what an employee receives for giving an employer a year of service.”
Towers Watson’s analysis included total retirement benefits in DB and DC plans, retiree medical and retiree health insurance plans.