Employer-sponsored defined benefit pension plans outperformed defined contribution plans in 2011 by nearly 3 percentage points, new research shows.
Global professional services firm Towers Watson arrives at this conclusion in a 2013 report, “Corporate Finance Matters.” The survey compares the median investment returns of defined benefit (DB) and defined contribution (DC) plans annually between 1995 and 2011, the most recent year for which data is available.
The recent survey of 2,080 DB and DC plans records an asset-weighted median investment rate of return of 2.74 percent for DB plans in 2011. This compares with a negative return of -0.22 percent plans for DC plans, a difference of 2.96 percent.
DB plans likewise surpassed the performance of DC plans in 2010 — a year in which both plan types achieved significant greater turns — by 0.98 percent (12.79 percent vs. 11.81 percent). DC plans did outperform DB plans in 2009 (20.86 percent vs. 15.46 percent, respectively).