DC expenditures now outweigh DB costs for employers

New data from the DOL's Bureau of Labor Statistics indicates that rivate industry employers now spend more per employee hour worked for defined contribution retirement plans (retirement plans that specify the level of employer contributions and place those contributions into individual employee accounts) than for defined benefit retirement plans (plans that provide employees with guaranteed retirement benefits that are based on a benefit formula).  

March 2012 private industry employer costs for defined contribution plans were 60 cents per employee hour worker, compared to 43 cents for defined benefit plans.

Employer costs for defined benefit plans were higher for natural resource, construction, and maintenance employees ($1.10) than for workers in other major occupational categories.

Employer cost of defined benefit plans for union workers ($2.00) is approximately 7 times higher than the cost for nonunion workers (26 cents).

Employers with 500 or more workers have defined benefit costs (99 cents) that are approximately four times higher than the defined benefit cost for employers that have 1 to 99 employees (23 cents).

A full chart outlining the costs and the trends in increases is available by clicking here.

These data are from the National Compensation Survey - Benefits program. To learn more, see "Retirement costs for defined benefit plans higher than for defined contribution plans," Beyond the Numbers, December 2012.

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