GAO Reports Declining Interest in Defined Benefit Plans Among Large Employers

As expected a recent GAO report indicates that decline in defined benefit plans is likely to continue. Moreover, the recent turmoil in financial markets will probably exacerbate that trend as plan sponsors find it more difficult to estimate required funding of future benefits.

Defined Benefit Pensions: Survey Results of the Nation's Largest Private Defined Benefit Plan Sponsors, GAO-09-291 March 30, 2009

Excerpt from report:

At the time of the survey, most sponsors reported no plans to revise plan formulas, freeze or terminate plans, or convert to hybrid plans before 2012. When asked about the influence of recent legislation or changes to the rules for pension accounting and reporting, responding firms generally indicated these were not significant factors in their benefit decisions. Finally, a minority of sponsors said they would consider forming a new DB plan. Those sponsors that would consider forming a new plan might do so if there were reduced unpredictability or volatility in DB plan funding requirements and greater scope in accounting for DB plans on corporate balance sheets. The survey results suggest that the long-time stability of larger DB plans is now vulnerable to the broader trends of eroding retirement security. The current market turmoil appears likely to exacerbate this trend.