Printer Friendly

Employers Are Still Satisfied With Defined-Benefit Plans.

Assets of defined-contribution plans--most commonly 401(k)s--grew 19% in 1998, according to a survey of 130 companies that are members of the Committee on the Investment of Employee Benefit Assets. But assets in traditional defined-benefit plans continued to be the bedrock of employer-sponsored pensions.

Defined-benefits plans last year had about 55% more in assets, covered almost 90% more people and paid out about 30% more in benefits than their defined-contribution counterparts, according to the survey by the Washington-based organization.

Formed in 1985, the committee is composed of more than 150 of the largest corporate pension funds in the United States with more than $1 trillion in assets under management on behalf of more than 15 million plan participants and beneficiaries.

"There is a general assumption that many companies have abandoned traditional defined-benefit plans, but the survey shows that the largest companies clearly haven't," said Allen Reed, committee chairman and president of General Motors Investment Management Corp., GM's pension management subsidiary.

Among other findings:

* Of the companies surveyed, 99% sponsored both types of plans, while only 16% sponsor cash-balance or hybrid defined-benefit plans.

* Defined-benefit plan assets were allocated 62% to equity, 28% to fixed income and 10% to other investments.

* Defined-contribution plan assets were allocated 31% to diversified equity portfolios, 38% to employer stock, 22% to fixed income, 7% to balanced funds and 2% to other options and loans.

The percentage of companies offering defined-contribution plan investment options in international equity, global equity and balanced funds rose substantially since 1992 to 69%, 22% and 81%, respectively.

Eighty-three percent of the companies provided investment education to their defined-contribution plan participants.

Total defined-contribution plan contributions per employee rose to more than $5,500 in 1998, with 29% of the total contributed by employers. Some 80% of all eligible workers participated in defined-contribution plans.
COPYRIGHT 2000 A.M. Best Company, Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 2000, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

Article Details
Printer friendly Cite/link Email Feedback
Comment:Employers Are Still Satisfied With Defined-Benefit Plans.
Publication:Best's Review
Article Type:Brief Article
Geographic Code:1USA
Date:Jan 1, 2000
Previous Article:Catering to Customers Is Key, Report Says.
Next Article:Dental HMO Allows Online Enrollment.

Related Articles
Current developments in employee benefits.
Can a 401(k) plan be a qualified replacement plan?
Property contributions to pension plans are prohibited, but what about profit-sharing plans?
Avoiding 401(k) traps.
Current developments in employee benefits.
Pension simplification finally arrives: the employee benefit provisions of the Small Business Job Protection Act of 1996.
The safe-harbor solution.
New tax law significantly improves benefits of 401(k) and other qualified plans.
Combining a "safe harbor" sec. 401(k) plan with a new comparability defined contribution plan.

Terms of use | Privacy policy | Copyright © 2019 Farlex, Inc. | Feedback | For webmasters