This finding of PricewaterhouseCoopers’ Management Barometer, along with recent pension reform, is causing employers to consider freezing their pension plans. In a news release, the company said that 67% of employers have reported closing the plan to new hires and 63% have reported freezing their plan.
The survey found that 54% of companies with a defined benefit pension plan have recently changed their plan or are considering changing it. Thirty eight percent have made a change over the past three years and 16% are considering a change over the next 12 months.
The reasons cited for changing their plans include:
- Increased costs – 85%
- Volatility of funding or expense – 64%
- Accounting requirements – 30%
- Competitors’ actions – 18%
- Government regulations – 18%
Employers are concerned about the effect the changes will have on employees though. According to the news release, the survey found that 75% of companies that made changes protected current employees’ benefits. Fifty nine percent adjusted benefits only for new hires and 48% grandfathered in certain employees based on age or service. Fifteen percent provided additional “transitional” benefits and 11% gave all employees a choice between old and new plans.
The Management Barometer is a quarterly survey of top executives of large US-based multinational businesses. The survey findings are from interviews with 147 CFOs and Managing Directors, of which 48% have a defined benefit plan.