How much do defined benefit pension plans costemployers?
|That depends on several factors, according to new analysis bythe Bureau of Labor Statistics.
|The data provider-arm of the Department of Labor set out toestimate the cost of pensions per employee for private-sectorsponsors.
|In 2015, the average pension costs was $4.48 per hour of laborworked for goods-producing industries (construction andmanufacturing), a number that accounts for only those workers withaccess to a defined benefit plan.
|Average costs drop precipitously when estimated for all workers,regardless of access to a pension, are factored.
|Pension costs for goods-producing industries have beenincreasing over the past decade. In 2008, the average was $2.73 perhour of labor. By 2012 it was $3.04, and in 2014 it was $4.00.
|In service-producing industries, which include trade,transportation, health care and education, the average cost ofproviding a pension was $3.00 per hour of labor worked.
|Costs were highest for what the Bureau calls the “information”sector of the economy, which includes the publishing and softwareindustries. In those areas of the economy, sponsors are paying$8.00 per hour of labor worked toward retirement obligations.
|Sponsors’ overall cost comes from three expenses: premiums toPension Benefit Guaranty Corp., fees on the administration ofplans, and the expense of employer contributions.
|The lowest cost of offering a pension was experienced thefinancial activities sector, where sponsors paid and average of$1.19 per hour worked, less than the $1.31 the sector paid in 2008.It is the only sector of the economy to be paying less now than itdid in 2008.
|Unionization can affect an employer’scost to providing pensions, as far more union membershave access to pension plans than do non-union workers.
|In March 2015, 72 percent of union workers throughout thecountry had access to a defined benefit plan, compared to 13percent of non-union workers.
|Sponsors paid $4.44 in pension costs per hour of labor unionworkers supplied in 2015, more than the $2.77 paid for non-unionworkers.
|The cost per hour of union labor was $2.58 in 2008.
|Pension costs are cheaper for bigger employers. Sponsors with100 to 449 workers pay $3.14 per hour of labor, and sponsors withmore than 500 employees pay $3.30 and hour.
|That’s compared to $3.43 for sponsors with 1 to 49 employees,and $4.08 for sponsors with 50 to 99 workers.
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