Large U.S. Businesses Continue To Shift Ffrom Traditional Pensions

Watson Wyatt Worldwide has reported new analysis showing the largest U.S. companies continued to shift from traditional pensions to 401(k) plans in 2005. Specifically, it found that only 37% of Fortune 100 companies offered a traditional pension plan to new hires in 2005, down from 42% in 2004, 50% in 2002, and 89% in 1985. At the same time, the percentage of companies offering workers only a 401(k) or other type of defined contribution plan increased to 36% in 2005, up from 25% in 2004 and 17% in 2002.

In light of these results, Watson Wyatt Worldwide urges Congress to act on long-standing funding and regulatory issues affecting pensions. At the same time, the firm’s experts say employers should get a true reading of their plans’ cost structure and of related workforce management issues before making plan changes.

Source: News Release Watson Wyatt (May 4, 2006)