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According to Diversified’s report, 95% of all large corporations offer a 401(k) plan (all offer some type of DC plan), and 80% offer a DB plan. However, evidence that many sponsors are likely to be terminating their defined benefit plans is widespread–only 42% of defined benefit plan sponsors state they are likely to continue to offer defined benefit plans to all employees during the next five years. Thirty-five percent expect to continue to offer DB plans to existing employees but not new employees, 13% are likely to freeze active DB plans, and 10% believe they will terminate active DB plans during this period of time. Thirty percent of all DB plan sponsors indicate the plan’s impact on company financial statements is their primary concern, narrowly edging out the financial health of the DB plan, which was singled out by 26% of all sponsors. Other top concerns include the company’s long-term commitment to the DB plan (15%), investor concerns about the plan (14%) and employee appreciation of the plan (12%). Other highlights from the report include: Nearly half (45%) of all DB plan sponsors have created a DC plan as a DB plan replacement. Fifty-three percent of large corporate plan sponsors use an adviser–a trend that is likely to grow, as 19% of plan sponsors have plans to hire an adviser within the next 12 months. On average, large corporate 401(k) plans offer 13 investment options in 2012–up slightly from 12 options in 2011. Seventy-six percent of large DC plans offer investments that are proprietary to the service provider. Across all large corporate plans, the benefits budget allocation for all retirement plans (DC plans, DB plans and nonqualified deferred compensation plans) is nearly equal to the health care budget, with 34% dedicated to retirement plans and 32% to health care. Just 20% of all plan sponsors believe participants understand their plan’s fees “very well.” Forty-six percent state participants understand fees “somewhat well,” and 34% report that participants do not understand the fees. “The Report on Retirement Plans 2012: Bridge to Your Retirement Success” survey was completed in the second quarter of 2012 by more than 270 individuals responsible for the administration of retirement benefits in a company with more than 1,000 employees. To request a copy of report, email RetirementResearchCouncil@divinvest.com.
According to Diversified’s report, 95% of all large corporations offer a 401(k) plan (all offer some type of DC plan), and 80% offer a DB plan. However, evidence that many sponsors are likely to be terminating their defined benefit plans is widespread–only 42% of defined benefit plan sponsors state they are likely to continue to offer defined benefit plans to all employees during the next five years. Thirty-five percent expect to continue to offer DB plans to existing employees but not new employees, 13% are likely to freeze active DB plans, and 10% believe they will terminate active DB plans during this period of time.
Thirty percent of all DB plan sponsors indicate the plan’s impact on company financial statements is their primary concern, narrowly edging out the financial health of the DB plan, which was singled out by 26% of all sponsors. Other top concerns include the company’s long-term commitment to the DB plan (15%), investor concerns about the plan (14%) and employee appreciation of the plan (12%).
Other highlights from the report include:
“The Report on Retirement Plans 2012: Bridge to Your Retirement Success” survey was completed in the second quarter of 2012 by more than 270 individuals responsible for the administration of retirement benefits in a company with more than 1,000 employees.
Rebecca Mooreeditors@plansponsor.com