Retirement-Plan Shift Continues

A new Towers Perrin report finds “further evidence of the ongoing shift in corporate America from traditional pensions to hybrid plans and defined-contribution programs.”
 
The report finds that 29 percent of organizations with traditional pension plans (called “defined benefit” programs) have eliminated them for future hires. Another 27 percent of companies have reduced or frozen accruals for current employees.
 
Many organizations are considering hybrid plans, sometimes called cash-balance plans, which feature some aspects of a pension plan and some aspects of a 401(k). Still, the fate of these hybrid plans is in the hands of legislators and regulators in Washington. Employers want the U.S. Congress to lay out some rules as to whether hybrid plans discriminate against older employees.