Corporate sponsors of large defined benefit plans contributed $44 billion to those plans in 2003, more than double the $21 billion contributed in 2002, according to a survey by the Committee on Investment of Employee Benefit Assets, an affiliate of the Association for Financial Professionals. Employer and employee contributions to defined contribution plans in 2003 totaled $7.8 billion and $17.4 billion, respectively. Employer and employee contributions in 2002 were $7.4 billion and $17.6 billion, respectively.
"The high level of contributions demonstrates that CIEBA-member plan sponsors have a long-term commitment to meeting the benefit promises they have made and to the retirement security of millions of plan participants," said Kimberly G. Walker, CIEBA chairman and president of Qwest Asset Management. "But we must not be complacent. "Pensions in Crisis," the CIEBA study issued last year, illustrates that various legislative, regulatory and accounting changes now being considered could undermine sponsors' commitment to defined benefit plans, a cornerstone of retirement income security."
The survey received responses from 103 of CIEBA's 120 corporate plan sponsor members. Those 103 members oversee a combined $686 billion in DB assets and $436 billion in DC plan assets. Of those CIEBA members responding, 95% sponsor both DB and DC plans.
DB plan assets increased by 20% in 2003, and DC assets increased 22%. "Improved market returns account for much of the increase, but DB assets were also boosted by high corporate contribution levels," according to a survey statement.
Eighty-three percent of the plan sponsors covered by the survey made a contribution to their defined benefit plans in 2003, the survey found.
The average DB asset allocation was 60% equities, 29% fixed income and 11% other; and the average DC asset allocation was 32% diversified equity, 30% employer stock, 27% fixed income, 8% balanced funds and 3% other options and loans. Most DB plan assets (82%) were actively managed, compared with 51% for DC plans.
