About one in four defined benefit plan sponsors will consider closing their plans to new employees and another 20% are considering a shift to defined contribution plans only in 2005, according to a new Hewitt Associates survey. While 55% of companies offering hybrid pension plans, including cash balance plans, do not expect a plan design change in 2005, 30% intend to make some change if legal and regulatory issues are not resolved. The most common change cited is to terminate or freeze the cash balance plan and provide all future retirement benefits under a defined contribution plan.
Separately, 47% of 401(k) plan sponsors said they are likely to automate certain features, including enrollment, contribution rate increases and rebalancing. About 25% are likely to make changes to their 401(k) contributions this year, with most either seeking to increase the company match or change the structure of the match.