Actuaries expect more U.S. corporations to move to hybrid retirement plans following the adoption of the final regulations established by the Pension Protection Act of 2006, said a survey from the ASPPA College of Pension Actuaries.
Respondents to the survey, which was conducted with 128 actuaries that work with more than 15,000 defined benefit and cash balance/hybrid plans, said actuaries expected 2,100 new plans would be added by the end of 2014. Actual data from the end of 2014 is not yet available.
Judy Miller, executive director of the ASPPA College of Pension Actuaries, said in a telephone interview there were 5,600 such hybrid plans at the end of 2013, the most recent data available.
Ms. Miller cited the final PPA regulations as a primary driver behind actuaries believing more hybrid plans will be established.
“I think it has helped having more of the final rules out,” Ms. Miller said. “A lot of this, it became ‘blessed’ so to speak when PPA was passed (in 2006), but it’s been a very slow process getting final regulations. But since regulations have come out and more people are comfortable with it, there really has been a big surge in activity.”
Ms. Miller said a step-up in activity could also be attributed to the IRS adding cash balance plans to their list of preapproved retirement plans.
“It makes it even more efficient for particularly small businesses — not necessarily tiny, but smaller — to not have to go to an independently designed program. The IRS is making it a little more efficient to go with one of these,” Ms. Miller said.
“I think for new plans to be going in, it’s generally going to be companies in some cases with only a handful of people, but more with a couple hundred (people),” Ms. Miller said, “so it’s in the smaller end of the marketplace.”