Pension plan freezes starting to slow

Most companies with DB plans committed to keeping them

The rate of pension plan freezes among Fortune 1000 firms has slowed and the majority of companies with defined benefit plans are committed to keeping them, according to two new studies by Watson Wyatt Worldwide.

The analysis of pension plan sponsorship shows the percentage of sponsors freezing their plans dropped from seven per cent to four per cent in 2007. New freezes reached their highest levels in 2006, when 42 additional firms on the list had frozen plans.

“Undoubtedly some companies will freeze their pension plans in the future but it appears that trend has peaked,” said Kevin Wagner, a senior retirement consultant at Watson Wyatt. “With less regulatory uncertainty and funding volatility better under control, the environment is now a more positive one for pension plan sponsors.”

Another Watson Wyatt study of 300 organizations with pension plans assets of more than $100 million US found 59 per cent of companies that have a defined benefit plan open to new hires have made a formal decision to keep these plans open.

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