UpFront | Published in July 2012

DB or Not DB?

Study shows shift from DB to DC

By Rebecca Moore | July 2012

Among benefits most directly related to economic security, employers with 50 or more employees are most likely (96%) to offer 401(k) or 403(b) defined contribution (DC) retirement plans. In addition, the Families and Work Institute’s “2012 National Study of Employers” found 83% of employers made contributions to employees’ individual retirement plans. Only 22% of employers offer defined benefit (DB) pensions.

Small-sized employers are less likely than larger ones to offer benefits that enhance employees’ economic security if those benefits have direct cost implications. The expense of such benefits may be considerable and are more easily borne by large employers.

Relatively few employers (10%) offer both phased retirement and defined benefit pension plans. Among those that do, small employers are just as likely as large to let their employees phase in to retirement without reducing pension payouts.

The study found employers in 2012 are less likely (22%) than those in 2005 (34%) to provide defined benefit pension plans or assistance in obtaining public benefits (20% in 2005, compared with 15% this year). However, employers this year are more likely (96%) than employers in 2005 (83%) to provide 401(k), 403(b) or other retirement plans, and are also more likely (83%) than employers in 2005 (74%) to contribute to employees’ retirement plans.