May 24, 2012
--- A significant number of employers that still offer
defined benefit (DB) pension plans say they remain committed to providing those
benefits to new salaried employees. ---
A Towers Watson survey of 424
midsize and large U.S. employers with DB plans found that more than two-thirds
(68%) of respondents that currently offer a DB plan to new salaried employees
remain committed to offering a DB plan to new hires over the next two to three
years. More than one-third (36%) of respondents currently offer a DB plan to
new employees. The survey also found support for DB plans is strongest at
companies that cover the most participants: among the largest 10th percentile
of respondents, 45% still offer a DB plan to new hires.
When asked why they are committed to
offering a DB plan to new hires, more than seven in 10 (71%) respondents cited
promoting employee attraction and retention as the key reason, followed by
maintaining employee morale, cited by 50% of respondents. The survey noted that
only one-fourth of respondents with active DB plans are not firmly committed to
their DB plan, and a small percentage (7%) plan to close or freeze their plan
over the next two to three years.
“[D]espite a vastly changed
landscape for retirement plans, the fact that many employers remain committed
to DB plans is encouraging, especially since it is more difficult for employees
to rely on a DC plan as an effective stand-alone retirement plan,” said Alan
Glickstein, a senior retirement consultant at Towers Watson.