May 23, 2012 (PLANSPONSOR.com) - A significant number of U.S. employers that still offer defined benefit (DB) pension plans say they remain committed to providing those benefits to new salaried employees.
A Towers Watson survey, based on responses from 424 midsize and large employers with DB plans, found that more than two-thirds (68%) of respondents that currently offer a DB plan to new salaried employees remain committed to offering a DB to new hires over the next two to three years. More than one-third (36%) of respondents currently offer a DB plan to new employees. The survey also found support for DB plans is strongest at companies that cover the most participants: among the largest 10th percentile of respondents, 45% still offer a DB plan to new hires.
When asked why they are committed to offering a DB plan to new hires, more than seven in 10 (71%) respondents cited promoting employee attraction and retention as the key reason, followed by maintaining employee morale, cited by 50% of respondents. The survey noted that only one-fourth of respondents with active DB plans are not firmly committed to their DB plan, and a small percentage (7%) plan to close or freeze their plan over the next two to three years.
“[D]espite a vastly changed landscape for retirement plans, the fact that many employers remain committed to DB plans is encouraging, especially since it is more difficult for employees to rely on a DC plan as an effective stand-alone retirement plan,” said Alan Glickstein, a senior retirement consultant at Towers Watson.