Employers Chill Defined Benefit Plans

Source: Bureau of Labor Statistics

“Frozen” Defined-benefit Plans (PDF)

Durng the current economic recession, as employers search for ways to reduce costs, the phrase “frozen retirement plans” is heard with greater frequency. Frozen plans are those that are closed to employees not previously participating in the plan and/or place limits on future benefits for some or all active participants. This issue of Program Perspectives focuses on defined- benefit retirement plans that are frozen.

Twenty percent of private industry workers and 79 percent of State and local government workers participated in a defined-benefit retirement plan in March 2009. Defined benefit plans provide employees with guaranteed retirement benefits that are based on a benefit formula. Of those that participated in defined benefit plans, 19 percent of private industry workers and 10 percent of State and local government workers were in frozen plans.