5500 Filings Track DB, DC Plan Trends

A review of the Form 5500 filings from 2008 confirms what even the most casual pension observer knows.

In a report forwarded by www.benefitslink.com reviewing the highlights from the 2008 Form 5500 filings by the Employee Benefits Security Administration (EBSA), the agency notes that in 1978, when legislation was enacted authorizing 401(k) type plans that allow employees to contribute to their own retirement plan on a pre-tax basis, participants contributed 29% of the contributions to defined contribution (DC) plans and only 11% of total contributions to all defined benefit (DB) and DC pension plans.   

In the years following, EBSA notes that employee contributions to DC plans steadily rose to a peak of approximately 60% in 1999, where it has remained. 

Other findings from Form 5500 series reports for 2008 plan years: 

  • The total amount of assets held by pension plans, which increased each year between 2002 and 2007, decreased $1.4 trillion (23%) in 2008. DB plan assets decreased by $0.6 trillion, while DC plan assets decreased by $0.8 trillion. 
  • Assets invested in 401(k) plans decreased 25.2% (to $2.2 trillion from a high of about $3 trillion in 2007). 
  • The total number of pension plans, which decreased each year over the 2001-2005 period, rose for the third straight year in 2008 to approximately 718,000 plans, a 1.4% increase over 2007. The number of DC plans rose by 1.6%, while the number of DB plans decreased by 1.2%. 
  • In 2008, the total active participant count decreased for the first time in three years, from 86.3 million to 86.2 million. The number of active participants in DB plans decreased for the ninth straight year, by 2.2%.  The number of active participants in DC plans increased to 67.2 million in 2008, up 0.6% from 2007. 
  • The number of 401(k) type plans continued to grow in 2008, with the number of plans increasing from 491,000 to 512,000.  The number of active participants in 401(k) type plans rose, albeit slightly from 59.6 million to 60.0 million. 
  • DC plan contributions increased by 4% (to $311.7 billion), while DB plan contributions increased by 57% (to $107.3 billion), the largest percentage increase since 2002.  Overall, contributions to pension plans increased by 13.8% in 2008, to $419.0 billion.  

Overall, pension plans disbursed $12.1 billion more than they received in contributions, 3% of contributions. DB plans disbursed $58.8 billion more than they collected in contributions, while DC plans disbursed $46.6 billion less than they received in contributions. 

The percentage of DB plans that report being fully frozen increased to 14.3% from 12.8% in 2007.  That said, in 2008, nearly a third (30.5%) of DB plans with 50-99 participants reported being frozen, the highest percentage by participant categories, compared with 26.2% in 2007.   

Though the share of DB plan assets in plans that were frozen doubled - from 4.7% in 2007 to 8.3% in 2008, IBM's decision to freeze its Personal Pension Plan (with 310,000 participants and $55 billion in assets) fully accounted for this increase, according to the report. 

The report is available online at http://www.dol.gov/ebsa/PDF/2008pensionplanbulletin.PDF