Seventy-seven percent of employers with defined benefit pension plans and 52% of employers with defined contribution plans don’t expect this year to reverse changes made to the plans in response to the economic downturn, according to a Buck Consultants survey.
The survey of nearly 200 companies shows that 22% made changes to their defined benefit plans in 2009. Sixty-eight percent of employers with salaried employee DB plans froze participants’ benefits in 2009 and 32% closed their plans to new employees. Of hourly union employee DB plans, 46% froze benefits and 36% closed their plans to new employees.
Twenty-four percent of companies made changes to their defined contribution plans in 2009. Of those, 43% reduced or eliminated their employer match in 2009 and 24% of those with a non-elective/profit-sharing employer contribution eliminated or reduced the contribution.
More than 40% of DB plans reported losing more than 20% of the plan’s value because of the economic downturn.
Tamara Shelton, principal and managing director of the retirement practice at Buck Consultants, said in a telephone interview that she had expected more DC plans would reverse their changes because of a general trend toward 401(k) plans as a retirement vehicle.
“My sense is that plan sponsors are starting to restore their match; some of them are starting to take action now,” she said. “They understand the need for providing some kind of retirement benefit.”