Study: DB Freezes Slowing Down

WASHINGTON, July 23, 2007 - The rate of pension plan freezes among FORTUNE 1000 firms has slowed, and the majority of companies with defined benefit plans are committed to keeping them, new Watson Wyatt research has found.

A Watson Wyatt news release said an analysis of pension plan sponsorship among FORTUNE 1000 companies shows that the share of plan sponsors freezing their plans dropped from 7% in 2006 to 4% in 2007 with a total 138 of 638 DB plans frozen in 2007.

New freezes reached their highest levels in 2006, when 42 additional firms on the FORTUNE 1000 list had frozen plans, according to the consultant.

Additionally, a Watson Wyatt study of 300 organizations with pension plan assets of more than $100 million found that 59% of companies that have a defined benefit plan open to new hires have made a formal decision to keep their plans open. The remainder apparently hasn’t decided, the second study found.

“Undoubtedly some companies will freeze their pension plans in the future, but it appears that trend has peaked,” said Kevin Wagner, a senior retirement consultant at Watson Wyatt, in the news release. “With less regulatory uncertainty and funding volatility better under control, the environment is now a more positive one for pension plan sponsors.”