More than one-third of companies will either freeze their defined benefit plans to new employees or freeze them to all employees over the next two years, according to Hewitt Associates' survey of 200 financial executives at large companies. Sixteen percent said their companies will close their defined benefit plans to new employees; 15% said they will freeze their DB plans for all employees and give them defined contribution plans instead; and 5% said they will freeze their DB plans to all employees and not provide any additional retirement plan.
Financial executives will also focus on the costs of their DB and DC retirement plans over the next two years, according to the survey. Sixty-five percent will look for ways to control the growth in costs, and 49% will look for ways to more effectively manage cost volatility. And 58% of executives said one of their top three priorities will be identifying ways to maximize the value received for the company's retirement plan investment.
Of employers with defined contribution plans, 59% said they plan to increase employee education, and 49% said they plan to take steps to lower 401(k) investment management fees.
The survey was conducted in the fall of 2004. Two-thirds of the companies surveyed had more than 10,000 full-time and part-time employees; 94% of the firms provide their employees with a defined contribution plan, and 58% provide a defined benefit plan.
