Survey Finds Employer Support for DB Strong in '05

December 18, 2006 ( - According to a survey conducted by the Committee on Investment of Employee Benefit Assets (CIEBA), large corporate retirement plan sponsors provided significant support to their defined benefit plans as well as their defined contribution plans in 2005.

A press release on the survey results said CIEBA members contributed $23 billion to their DB plans in 2005, more than $5,500 per active participant. Employer contributions to DC plans equaled almost $2,300 per active employee.

Survey results also showed DB plans continue to be central to the provision of retirement income for plan participants. DB plans had 67% more assets than DC offerings of sponsors surveyed and paid out 38% more in benefits, the release said. Benefit payments totaled $97 billion in 2005, of which $56 billion was paid to DB participants and $41 billion to DC participants.

Assets in DB plans increased from beginning year levels by 5%, largely due to investment returns. Assets in DC plans increased by 2%, largely due to contributions. The average investment return for DB plans was 9.3% (net of all expenses) compared to an average of 4.7% (net of fees) for DC plan accounts.

For DC plans the combined total of employer and employee contributions per active employee increased to $8,027 in 2005, compared to $7,875 in 2004.

Additional survey findings included:

  • DB plan assets were invested as follows: 38% to US equity, 21% to international equity, 28% to fixed income/cash, and 13% to other investments.
  • DC plan assets were invested as follows: 36% to diversified equity portfolios, 25% to employer stock, 27% to fixed income, 8% to balanced funds, and 4% to other options and loans. Company stock allocations have steadily declined since 2001 when 36% of DC assets were in company stock.
  • Most DB assets (84%) were actively managed compared to approximately half (52%) of DC assets.
  • A significant percentage of CIEBA members now offer some form of advice to DC plan participants. Individual financial planning assistance and interactive advisory programs were offered by 28% and 39% of DC plan sponsors, respectively. Ten percent offered professionally managed participant accounts.

The survey covered 112 corporate plan sponsors responsible for the management of $852 billion in pension assets and $511 billion in defined contribution plan assets. Plans in the survey cover 10.6 million DB plan participants and 5.5 million DC plan participants.