The number of new cash balance plans—also known as hybrid plans—is up by 32 percent, according to a new report, although the number of new 401(k) plans is growing more slowly.
That’s among the findings from the 2015 National Cash Balance Research Report from Kravitz, which also found that the growth among cash balance plans more than doubled industry projections of 15 percent year over year.
In comparison, 401(k) plans only recorded growth of 3 percent.
Cash balance plans are displacing defined benefit plans at a quick pace, and now make up 28 percent of all DB plans.
In 2013, the most recent year for which complete IRS reporting data are available, there were 12,721 such plans active.
In 2001, they made up only 2.9 percent of the sector.
While they offer the flexibility and portability of a 401(k) plan, cash balance or hybrid plans also provide high contribution limits, such as DB plans formerly offered.
Among some of the other findings included in the report is that 89 percent of cash balance plans are found at companies with fewer than 100 employees.
In addition, the report said that companies’ contributions toward employee retirement savings are more than doubled when those companies add a cash balance plan to their offerings; the average employer contribution to staff retirement accounts is 6.3 percent of pay in companies with both cash balance and 401(k) plans, but just 2.8 percent of pay in firms with 401(k) alone.
Certain states are taking to hybrid plans far ahead of others. California and New York together accounted for 23 percent of all new plans, with Illinois and Ohio following them.
Meanwhile, the growth of such plans in Minnesota is exploding; it’s seen growth in the number of new plans of more than 50 percent year over year.