Watson Wyatt released its study today of retirement plans in Fortune 100 companies. It found that, since 1985, sponsorship of defined benefit plans has dropped significantly, from 90 out of 100 companies sponsoring defined benefit plans in 1985, to only 58 of 100 companies sponsoring defined benefit plans in 2006.
The number of companies sponsoring defined contribution plans only increased between 1985 and 2006. In 1985, only 10 companies sponsored a defined contribution plan only. By 2006, this number had increased to 42 companies sponsoring a defined contribution plan only.
The interesting trend was in the growth of hybrid plans. In 1985, of the Fortune 100, the breakdown between types of plans was predictable - 90 sponsored defined benefit plans, 1 sponsored a hybrid plan, and 10 sponsored defined contribution plan only. By 2002, 49 are sponsoring traditional defined benfit plans, 34 are sponsoring hybrid plans, and 17 are sponsoring defined contribution only plans. By 2006, 31 are sponsoring traditional defined benefit plans, 27 are sponsoring hybrid plans, and 42 are sponsoring defined contribution only plans.
With Notice 2007-6, issued earlier this year by the IRS, the IRS is now beginning to process determination letter applications on these plans.
Technorati Tags: Pension Protection Act, cash balance, defined benefit, hybrid, pension, ppa
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