2012 Hot Topics in Retirement - Aon

Defined Benefit Status —Among Sponsors O�ering
Defined Benefit Plan Status
(n ranges from 68 to 293)
Defined benefit sponsorship has continued to slowly decline. While only
23% of employers o�er defined benefit plans to new hires, 59% of employers
carry a pension liability on their books. Larger employers (with more than
10,000 employees) are far more likely to o�er a defined benefit plan. Among
defined benefit plan sponsors, the benefits can be categorized into one of
three statuses—open, closed, or frozen:
39% are open plans providing benefit accruals to new employees, and larger
plans are more likely to have open plans; this is slightly lower than in the
2011 and 2010 surveys (41% and 45%, respectively). Larger employers
were more likely to have open plans, with 47% of employers with 10,000
to 24,999 employees, and 53% of employers with more than
25,000 employees.
36% have been closed to new entrants, allowing some segments of their
employee population to accrue additional benefits but not new hires;
this is a slight increase from last year at 32%.
26% are frozen, where no participants are accruing additional benefits;
this is nearly unchanged from last year’s response of 27%, although
higher than the 24% reported in 2010.
Of all defined benefit plans—open, closed, or frozen—more than three-quarters
of plans (77%) provide benefits based on traditional formulas such as a final
average pay plan or career average pay plan. The remainder (23%) use hybrid
plan formulas, such as cash balance or pension equity formulas.
(Among Sponsors O�ering) All DB Plans Traditional DB Plans Hybrid DB Plans
Open Plan
Closed Plan
Frozen Plan
39%
36%
26%
35%
37%
28%
53%
31%
16%
Aon Hewitt 11