Close Close

Life Health > Life Insurance

Consulting Firm Sees Shift Away From Hybrid Pension Plans

Your article was successfully shared with the contacts you provided.

Large companies continue to desert traditional defined benefit pensions, and use of other types of DB plans is also waning.

Researchers at Watson Wyatt Worldwide, Washington, have come to that conclusion in an analysis based on analysis of retirement plans at the 100 largest U.S. employers.

In 1985, 89% of large employers offered traditional DB pension plans, 10% offered 401(k) plans and other defined contribution plans, and only 1% offered “cash balance” plans or other hybrid DB plans, according to the Watson Wyatt researchers.

In 2005, 36% of the largest employers offered defined contribution plans, 27% offered hybrid DB pension plans and only 37% offered traditional DB pension plans, the researchers report.

Although use of hybrid plans has increased since 1985, it has fallen from a peak of 33% in 2004, the researchers report.

Critics of corporate shifts to hybrid plans say the conversions often shortchange older employees or middle-aged employees.

Advocates of the hybrid plan designs say the hybrid plans can give employers the ability to offer portable benefits that are guaranteed by the Pension Benefit Guaranty Corp.


© 2023 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.