Long has the death knell been sounded for the traditional defined benefit (DB) pen- sion plan. However, among plan providers that participated in both the 2015 and 2017 PLANSPONSOR Defined Benefit Administration surveys (PLANSPONSOR conducts the
survey biennially) plan counts are up substantially—by 22.0%. Considering the health of the
pension risk-transfer market and the reported decline of these plans, one wonders where the
“If you asked the man on the street, he would say that no new employees have pension
plans, but that’s not true for large employers,” says Stewart Lawrence, senior vice president and
national retirement practice leader at The Segal Group Inc. in New York City. “Of the Fortune
100, a quarter of them still have pension plans that cover new employees, which is counter-
intuitive,” he says. “Fully a quarter of large employers have open plans, and nearly all of them are
hybrid plans or cash balance plans.”
Interest in such plans ticked up after the Pension Protection Act of 2006 (PPA) gave cash
balance plans the opportunity to tie interest credits with market returns. Cash balance plans will
become even more popular as plan sponsors question whether defined contribution (DC) plans
can facilitate retirement income like defined benefit plans do, according to industry experts.
With that plan option, sponsors can provide a pension but without the same volatility they expe-
rience in traditional pension plans, and participants will be able to track the account’s value just
like in DC plans.
In fact, cash balance plans, specifically, saw a 78.1% increase from 2015 to 2017 among
providers participating in both years of the Defined Benefit Administration Survey. They now
account for more than a fifth ( 20.7%) of all defined benefit plans.
2017 Defined Benefit Administration Survey