A Watson Wyatt press release says that in another first, more Fortune 100 companies offer hybrid pension plans, such as account-based cash balance plans, rather than traditional defined benefit (DB) plans.
Today, 55 companies in the Fortune 100 offer only DC plans to new hires, a jump from 46 at the end of 2007, the press release said. The numbers include four companies that announced in 2009 that they will switch from a DB to a DC-only plan.
Among those companies still offering DB plans, 22 have traditional plans and 23 offer hybrids such as cash balance plans.
“The trend toward account-based plans is likely to continue because of their visibility and transparency. With the exposed weaknesses in 401(k) plans and the ever-present need to manage the workforce, more companies might opt to provide hybrid plans, now seen as a viable alternative to offering only a DC plan. However, to reduce costs, companies might instead continue cutting back on employer-sponsored retirement benefits in general. The two paths will have significant, yet very different, implications on the retirement of millions of workers,” commented Kevin Wagner, senior retirement consultant at Watson Wyatt, in the announcement.
Plan type 1998 2002 2004 2005 2006 2007 2008 2009
Traditional 67 49 40 34 30 28 24 22
Hybrid 23 34 34 29 28 26 25 23
DC only 10 17 26 37 42 46 51 55
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