Percentage of Employers Still Offering Defined Benefits is …

The switch from pensions to 401(k)s has been swift and dramatic.

The switch from pensions to 401(k)s has been swift and dramatic.

The shift from defined benefit plans to 401(k)s has been swift and dramatic, but here’s a stat that should still garner attention.

According to Towers Watson, between 1998 and 2015, the percentage of employers still offering a traditional defined benefit plan to most newly-hired employees fell from roughly 50 percent to 5 percent.

Additionally, and as one might expect, there has been an uptick in plan freezes and closings since the 2008 financial crisis, according to a new report from the firm that analyzed retirement plan offerings to newly hired salaried employees among Fortune 500 companies..

The move away from traditional pensions has been fueled by several factors, including a desire to better manage retirement costs, a more mobile workforce, the simplicity of account-based designs, government and accounting regulations, market trends and global competition.

The result?

“[W]orkers who experience a loss of guaranteed retirement income may not exit the workforce in a timely fashion—an outcome that traditional pensions were at least partly designed to avoid. Such counter-cyclical workforce trends could necessitate increased severance pay, raise benefit costs and reduce mobility within an organization.”

Highlights (or lowlights, depending on one’s viewpoint) of the analysis include the following:

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