In a new report, “Retirement Offerings in the Fortune 500: A Retrospective,” Willis Towers Watson reveals that among these companies, only 16% offered a defined benefit (DB) plan to new hires in 2017, down from 59% in 1998.
Nonetheless, 51% of Fortune 500 companies still employ workers who are actively accruing pension benefits, and 93% of those that sponsored a pension in 1998 still manage plan obligations and assets.
Since the Great Recession of 2008, there has been an uptick in plan freezes. In 2008, 20% of companies froze their DB plan, and 19% closed it to new hires. By 2017, 42% sponsored a frozen plan, and 24% had closed the plan.
After having eliminated a DB plan for new hires, most employers contribute more to the defined contribution (DC) plan.
In 1998, only 41% of these companies offered a DC plan, but by 2017, that had risen to 84%. Ten percent amended their traditional DB plan to a hybrid design and were still offering these plans in 2017. Only 6% of Fortune 500 employers retained the same DB structure from 1998 to 2017.
Thirty-four percent of employers that offered hybrid plans to workers in 1998 were still offering them in 2017, and 51% of employers that converted their DB plans to hybrid plans after 1997 still offered them to new hires.
Willis Towers Watson also learned that certain industries, most notably insurance and utilities, are more likely to offer DB plans. In fact, nearly half of companies in these sectors still offered DB plans to newly hired employees in 2017.
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