Slower decine of DB plans
The pace of retirement plan changes among Fortune 100 companies is stabilizing and most still offer pension plans to new employees, according to analysis by Watson Wyatt Worldwide.
Fifty-four firms offer a defined benefit (DB) pension plan to newly hired salaried workers. Following an 11-percentage-point decline between 2004 and 2005, the number of companies sponsoring these plans fell by five percentage points in 2006 and four percentage points in 2007.
The rate of change slowed after passage of the Pension Protection Act of 2006 in the United States, which established a more supportive environment for traditional and hybrid DB plans, says Watson Wyatt. But with proposed hybrid plan regulations not final until 2009, it could take several years for the effect of these developments.
“The peak rate of replacing DB plans with defined contribution-only plans appears to be behind us,” said Alan Glickstein, a senior retirement consultant at Watson Wyatt. “As companies evaluate what the new rules mean for them, we could very well see a renewed commitment to hybrid and other DB plans.”
Most companies that sponsor a DB plan also offer new employees a de-fined contribution (DC) plan and 46 firms moved to a DC-only approach.
A separate Watson Wyatt study of 300 large companies found more than one-third of sponsors that converted a traditional DB plan to a hybrid plan did so to reduce cost or cost volatility,
