WASHINGTON — More than 20% of corporations have frozen their defined benefit plans, and many others are expected to follow suit.
The definition of a "frozen" pension plan is fuzzy. Some companies consider their plan frozen when no additional accruals are permitted; others use the term when new employees are not allowed to participate; and still others stop service accruals for existing participants, while letting them accrue new benefits based on increases in their pay.
The definition might be soft, but the statistics are hard.
A survey by Aon Consulting, Chicago, found that 21% of 1,000 large pension plans were frozen between 2001 and 2003, including 6% last fall. (Aon's parent, Aon Corp., froze its approximately $1 billion plan in January.)
The American Academy of Actuaries, Washington, found that 9% of the 232 plans it surveyed had frozen benefits prior to 2000, and 11% since then. Another 7% froze their plans to new entrants, while 8% were contemplating either freezing accruals or shutting out new entrants.
The companies surveyed by Aon froze their plans largely because of the growing cash contributions they had to make, said Christopher M. Bone, executive vice president and head of the retirement practice. "We were quite startled at how many pension plans (were) frozen," said Mr. Bone, who headed the team that conducted the survey.