The combined value of U.S. employer-sponsored retirement plans in eight industries, as measured by percentage of pay employers are contributing, declined 19% to 6.36% from 7.88% of pay for the 10-year period ended Dec. 31, 2008, according to an analysis by Towers Watson.
A 53% drop in the value of defined benefit plans fueled the overall decline, with DB contributions slipping to 1.99% of pay from 4.19% in 1998. That decrease was somewhat offset by a 38% increase in defined contribution plan value, with contributions rising to 3.99% of pay in 2008 from 2.89% in 1998.
Among the industries analyzed, retail and wholesale contributions were down 33% for the 10-year period; manufacturing, down 29%; energy, natural resources, gas and electric, down 24%; pharmaceuticals, down 13%; high tech, down 10%; financial services, down 9%; health care, down 4%; and services, up 3%.
“Companies now are giving their employees less retirement value than they were before,” said Kevin Wagner, Towers Watson retirement practice director, in a telephone interview. “It's a redistribution of value of what an employee receives for giving an employer a year of service.”
Towers Watson's analysis included total retirement benefits in DB and DC plans, retiree medical and retiree health insurance plans.