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.