The number of Fortune 100 companies that don’t offer defined benefit pensions to new employees increased in 2013, according to research by Towers Watson.
At the end of 1998, 90 Fortune 100 companies offered some sort of defined benefit, either a traditional or hybrid plan, like a cash balance plan, along with a defined contribution plan option. Today, only 30 companies on the list offer both DB plans and DC plans to new salaried hires, Towers Watson found.
Most companies, Fortune 100 companies included, have attempted to lower their retirement costs over the past decade. The most popular way has been to close pension plans to new hires and begin offering defined contribution plans instead.
The transition from defined benefit to defined contribution plans over the past 15 years can also be attributed to the shift in the type of companies on the Fortune 100 list.
In the past, manufacturing companies, which were more likely to offer defined benefit plans to their workers, dominated the list, but over time, manufacturing has been replaced with technology companies, which are more likely to offer defined contribution plans, the report found.
The changes in the types of plans offered “signal a large-scale redistribution of corporate resources for retirement,” the report found. “Employees are spreading their retirement dollars more evenly across the workforce, rather than concentrating benefits on older and longer-tenured workers.”