More than three in 10 Fortune 1,000 companies with defined-benefit pension plans have frozen at least one of those plans, according to a survey released Wednesday, July 22.
Of 607 employers on the 2009 Fortune 1,000 list that sponsor defined-benefit plans, 31.3 percent have frozen at least one of those plans, according to benefit consultant Watson Wyatt Worldwide in Arlington, Virginia. That’s up from 2008, when 27.1 percent of 638 companies sponsoring defined-benefit plans had frozen at least one plan.
As the corporate drive to freeze defined-benefit plans was gathering strength in 2004, just 7.1 percent of Fortune 1,000 companies with defined-benefit plans had frozen one or more plans.
Big, well-known Fortune 1,000 employers that have frozen pension plans in 2009 include insurer Cigna Corp. in Philadelphia and banking giant Wells Fargo & Co. in San Francisco. In a freeze, the pension plan continues, but future benefit accruals cease for some or all participants.
Employers freezing their pension plans have done so for a variety of reasons, including reducing retirement plan costs and volatility of required contributions for defined-benefit plans, which can fluctuate significantly due to changes in interest rates and investment results.
The survey, based on a review of companies’ Securities and Exchange Commission filings, is available at www.watsonwyatt.com.