WASHINGTON Roughly two-thirds of companies with pension plans have either closed the plan to new hires or frozen it in the past two years, according a new survey by Employee Benefit Research Institute and Mercer Human Resource Consulting, Washington.
Increasing pension plan costs and pending accounting rule changes have contributed to the reductions, the survey found. In the last two years, about 35% of the respondents had either closed or frozen their pension plans, and about 33% of respondents indicated they were likely to close or freeze them in the next two years. More often, plan sponsors indicated that they would simply close the plans to new hires.
Most employers that reduced or shut down DB plans increase employer contributions to defined contribution plans, and the survey found that many employers planning new limits on their pension plans will also offer enhanced DC contributions. Among plan sponsors that closed their DB plan to new hires in the last two years, 78% said they have increased or intend to increase DC contributions. Of those that plan to close their plans in the next two years, 81% would increase employer contributions to their DC plan.
EBRI and Mercer polled 162 plan sponsors in spring 2007.