After years on the endangered species list, defined benefit (DB) plans have halted what many considered their slide toward extinction, according to two new surveys by benefits consultant Watson Wyatt Worldwide.
One survey showed that the percentage of Fortune 1,000 plan sponsors that froze DB plans in 2007 dropped to 4% from 7% in 2006–on par with the 4% that were frozen in 2005. A second study of 300 organizations with pension plan assets of more than $100 million found that 59% have made a formal decision to keep their plans open to current participants and new employees.
Based on the historical focus of the first study and the forward-looking assessment of the second, it appears that DB plan freezes may have peaked last year, according to Alan Glickstein, senior retirement partner at Watson Wyatt. "We are not ready to declare them extinct," he says. "If they are kept on a Sierra Fund watch and defended properly, they should remain a part of the retirement landscape."
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