Benefits January 18, 2008

Dropped DC Plans Drive Decrease in Retirement Offerings in 2005

January 18, 2008 (PLANSPONSOR.com) - The total number of pension plans fell for the fifth consecutive year by 0.6% in 2005 to 679,000 plans, according to the Private Pension Plan Bulletin: Abstract of 2005 Form 5500 Annual Reports recently released by the Department of Labor's Employee Benefits Security Administration (EBSA).
Reported by

CCH, citing Spencer’s Benefits Reports, said the EBSA found the number of defined benefit plans actually increased by 0.2%, while the number of defined contribution plans fell by 0.6%. The decline in defined contribution plans was led by a 20% decrease in the number of money purchase plans, after a 30% decrease in 2004, the news report said.

However, the number of active participants in defined benefit plans decreased to 20.3 million, while the number of active participants in defined contribution plans increased to 62.4 million for the 2005 year. The number of 401(k)-type plans continued to grow in 2005, increasing from 419,000 to 436,000, and the number of active participants in these plans increased to 54.6 million.

Total retirement plan assets increased for the third consecutive year to $5.1 trillion in 2005 – up from $4.7 trillion in 2004. Defined benefit plan assets increased by 7.0% to $2.3 trillion, while defined contribution plan assets increased by 8.5% to $2.8 trillion. Assets of 401(k) plans increased by 9.5% to $2.4 trillion.

Other findings of EBSA’s review of 2005 Form 5500s, according to the news report, included:

  • Aggregate returns of defined contribution plans exceeded those of defined benefit plans for the first time in the last seven years.
  • Defined contribution plan deferrals grew by 8.8% to $248.8 billion. Defined benefit plan contributions decreased by 1.9% to $92.7 billion, a smaller decline than was observed in 2004. Overall contributions to pension plans increased by 5.7% in 2005, to $341.5 billion.
  • In 2005, pension plans disbursed $354.5 billion for payment of benefits, with $136.6 billion being disbursed from defined benefit plans and $218 billion from defined contribution plans. These payments were made either directly to retirees, beneficiaries, and terminating employees; or to insurance carriers for payment of benefits. These amounts reflect a decrease from 2004 of 2.8% in defined benefit plans and an increase of 13% in defined contribution plans.
  • Overall, pensions disbursed $13.1 billion or 3.8% more than they received in contributions. Defined benefit plans disbursed $43.9 billion more than they collected in contributions, while defined contribution plans disbursed $30.8 billion less than they received in contributions.

The EBSA bulletin is here .

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