ATLANTA -- Use of hybrid defined benefit plans is likely to grow, according to Arthur Andersen experts and a survey by the firm's human capital services practice.
"Hybrid plans are primarily a cash balance or pensions equity plan," said Todd Peterson, senior manager at Arthur Andersen. "They are . . . still pension plans but they look like savings accounts, so people understand the hybrid plans no matter what their age."
The new retirement plan designs are less complex and accounts can often be taken from one job to another.
The survey was distributed throughout the United States to organizations that sponsor defined benefit plans for 500 or more participants. The objective was to find current and emerging trends and to establish benchmarks for competitiveness and performance.
"Eight percent of all large companies have started using the hybrid plans," Mr. Peterson said. "IBM, Shell Oil, Eastman Kodak and Time Inc. are just a few of them."
The survey results also showed:
* Defined benefit plans are well-funded, resulting in low levels of current cost;
* Fewer small businesses are offering defined benefit plans; however, there is an increase in the number of defined benefit plans among larger employers; and
* Most administrative tasks have been automated, but benefit applications and participant inquiries are still processed manually.
According to Mr. Peterson larger companies are adopting the plans because their diverse work forces create a greater need for flexible plans. But, he said, if smaller companies have short- and long-term employees, then they also should consider using the plans.