Fewer Employers Offering Defined Benefit Pension Plans to New Salaried Employees

Jerry Geisel

03 October 2012

The percentage of the largest U.S. employers that offer a defined benefit pension plan to new salaried employees continues to fall, according to new research.

As of June 30, 30 percent of Fortune 100 companies offered a defined benefit plan to new salaried employees, according to New York-based Towers Watson & Co. That’s down from 33 percent at the end of 2011, 37 percent in 2010 and 43 percent in 2009.

As recently as 1998, defined benefit plans were the norm among the nation’s largest employers, when 90 percent of Fortune 100 companies offered the plans to new salaried employees.

Since then, large employers have moved away from the plans. “Large employers have been reassessing their retirement offerings for some time. … The shift is motivated by several factors, including employers’ desire to reduce overall retirement costs — perhaps due to higher compensation and benefit costs elsewhere, especially health care — perceptions that workers prefer more portable plans, market trends, and the belief that such a shift reduces financial risk,” Towers Watson said in an article posted Oct. 2 in The Insider, a company publication.

In addition, as more companies have moved away from defined benefit plans, the competitive pressure on employers to continue to offer the plans has declined, said Alan Glickstein, a Towers Watson senior retirement consultant in Dallas.

The move away from defined benefit plans has been especially pronounced for traditional plans, in which the benefit is typically based on employees’ years of service and employees’ salary during their last years of employment.

Just 11 Fortune 100 companies offered a traditional defined benefit plan to new salaried employees as of June 30, down from 14 in 2011, 17 in 2010 and 19 in 2009.

By contrast, during the 1980s, defined benefit plans were the norm among Fortune 100 companies. In 1985, for example, nearly 90 percent of Fortune 100 companies offered a traditional defined benefit plan to new employees.

The prevalence of hybrid plans, typically cash balance plans, also has sharply declined. As of June 30, 19 Fortune 100 companies offered hybrid plans to new salaried employees. That’s unchanged from 2011, but almost 50 percent less compared with 2004, when 35 Fortune 100 companies offered the plans. While hybrid plans have defined benefit and defined contribution plan elements, legally they are defined benefit plans.

While a handful of big employers, including Dow Chemical Co. and The Coca-Cola Co., have set up new cash balance plans in recent years, new formations have been more than offset by other Fortune 100 companies, including Bank of America Corp., SunTrust Banks Inc. and Wells Fargo & Co., which began to phase out their cash balance plans.

As employers have moved away from defined benefit plans, the overwhelming majority of Fortune 100 companies now offer only a defined contribution plan to new salaried employees, according to Towers Watson.

As of June 30, 70 percent of the Fortune 100 offered only defined contribution plans, up from 67 percent in 2011, 63 percent in 2010 and 57 percent in 2009. By contrast, as recently as 1998, just 10 percent of Fortune 100 companies offered only defined contribution plans.

On the other hand, as employers have shifted to an all-defined-contribution-plan approach, they have added certain defined benefits plan features to those plans, Glickstein noted.

For example, a rising percentage of employers have added automatic enrollment features to their defined contribution plans. That feature is aimed at those employees who don’t respond to company requests to enroll. Unless they specifically object, such employees then are enrolled with a percentage of their salary — based on the employer’s design — contributed to the plan, assuring the growth of employees’ defined contribution plan account balances.

Jerry Geisel writes for Business Insurance, a sister publication of Workforce Management. Comment below or email

Stay informed and connected. Get human resources news and HR features via Workforce Management’s Twitter feed or RSS feeds for mobile devices and news readers.

Written by Jerry Geisel


blog workforce

We build robust scheduling & attendance software for businesses with 500+ frontline workers. With custom BI reporting and demand-driven scheduling, we help our customers reduce labor spend and increase profitability across their business. It's as simple as that.

Book a call
See the software

Related Articles

workforce blog


EEOC says that employers legally can offer incentives to employees to get vaccinated in almost all instances

If you’re an employer looking to get as many of your employees vaccinated as possible, you can rest eas...

ADA, CDC, COVID-19, EEOC, GINA, pandemic, vaccinated

workforce blog


Fixing some common misconceptions about HIPAA

Ever since the CDC amended its COVID-19 guidance to say that the fully vaccinated no longer need to wea...

COVID-19, health care, HIPAA, human resources, wellness

workforce blog


We are in the midst of a public mental health crisis; how employers can help

Do not ignore these issues or your employees who are living with them. Mental health illnesses are no d...

ADA, benefits, Coronavirus, FMLA, mental health, paid time off

Read the magazine

workforce magazine