Not a Member? Get access to HR news and resources that you can trust.
HR professionals can play a key role in creating business efficiency—starting with their own department.
Is your employee handbook ready for the New Year? With SHRM’s Employee Handbook Builder get peace of mind that your handbook is up-to-date.
Get the HR education you need without travel expenses or time out of the office.
We don't just visit a city, we take it over. Join us in NOLA -- June 18 - 21, 2017.
Insurance, utilities firms buck trend away from traditional pensions
Those hardy employers that have kept their defined benefit (DB) pension plans open to new salaried employees seem intent on staying the course, as fewer of the biggest U.S. companies last year froze their DB plans in favor of offering only a 401(k)-style defined contribution (DC) plan to fresh hires.
A September 2014 report by Towers Watson,
Retirement in Transition for the Fortune 500: 1998 500: 1998 to 2013, reveals that:
Hybrids Claim Larger Share
While traditional pension plans have taken the hardest hit during the shift from DB to DC plans, hybrid pension plans have held relatively steady. Half of the employers that sponsored a DB plan maintained a hybrid plan—typically a
cash balance plan—during that period. More than half (57 percent) of employers that established a hybrid plan either before or after 1998 still offered a hybrid plan to new hires in 2013.
Fortune 500 Companies’ Retirement Plans: 1998–2013Numbers indicate plans offered to new salaried hires at the end of each year.
Total DB plans
Traditional DB plans
Hybrid DB plans
DC plan only
Source: Towers Watson
Industry Sectors Differ
The analysis also found that certain sectors—utilities and insurance, for example—are retaining their pension plans. Among insurance companies, 66 percent offer both a pension and DC plan to new hires while 59 percent of utilities do so.
The insurance sector includes mutual insurance companies that are not publicly traded, and these companies face different external pressures and have different objectives from other industries. Additionally, utilities tend to have lower turnover and more long-term career workers than other sectors, the report notes.
In contrast, the high-tech, services and retail sectors have historically had low DB sponsorship rates, and DC plans are likely a better fit for their business needs. Overall DB plan sponsorship for these sectors never exceeded 36 percent.
Stephen Miller, CEBS, is an online editor/manager for SHRM. Follow him on Twitter
Compensation & Benefits e-Newsletter:
To subscribe to SHRM's Compensation & Benefits e-newsletter, click below.
Sign Up Now
You have successfully saved this page as a bookmark.
Please confirm that you want to proceed with deleting bookmark.
You have successfully removed bookmark.
Please log in as a SHRM member before saving bookmarks.
Your session has expired. Please log in again before saving bookmarks.
Please purchase a SHRM membership before saving bookmarks.
An error has occurred
Recommended for you
Join SHRM's exclusive peer-to-peer social network
SHRM’s HR Vendor Directory contains over 3,200 companies