NEW YORK: April 12, 2010 – A majority of employers that made changes to their retirement plans in response to the economic downturn expect to keep those changes in place throughout 2010. This is among the findings in a survey released today by Buck Consultants.
The survey, “Retirement Plan Changes in a Period of Economic Uncertainty,” measures the actions taken by employers during 2009 and gauges their plans as conditions improve. Results show 77 percent of employers with traditional pension plans, also called defined benefit plans, and 52 percent of employers with defined contribution plans, such as 401(k) plans, will not reverse changes or are uncertain if they will reverse previous changes. The study analyzes responses from nearly 200 organizations across a wide range of industries.
“The economic downturn has had a dramatic impact on employer-sponsored retirement plans,” said Tamara Shelton, principal and managing director of the retirement practice at Buck Consultants. “Due to decreased asset levels during 2008 and changes to funding rules governing defined benefit plans required by the Pension Protection Act of 2006, employers’ minimum contribution requirements for 2009 through 2011 will far exceed the 2008 requirements in many cases.”
In response to the downturn, the most common changes employers made to defined benefit plans were to freeze participants’ benefits at their current levels (68 percent of plans covering salaried employees) and to close the plan to new employees (32 percent of plans covering salaried employees).
Twenty-four percent of respondents elected to make changes to their defined contribution plans during 2009. The most common change was to reduce employer contributions. Only six percent of respondents with a defined contribution plan with employer matching contributions reported increasing their match during 2009. At the same time, the survey did not indicate any decline in enthusiasm for defined contribution plans as a retirement vehicle given that 23 percent of the plans without an automatic enrollment feature either added one or seriously considered doing so.
More than 40 percent of survey respondents reported that their defined benefit plan’s funded status had lost more than 20 percent of its value due to the economic downturn.
Buck Consultants is a leader in human resource and benefits consulting with more than 1,500 professionals worldwide. Founded in 1916 to advise clients in establishing and funding some of the nation’s first public and private retirement programs, Buck is an innovator in the areas of retirement benefits, health and welfare programs, human capital management, compensation, and employee communication. News and other information about Buck Consultants are available at www.buckconsultants.com. Buck is an independent subsidiary of ACS, A Xerox Company.
About ACS, A Xerox Company
Xerox Corporation is a $22 billion leading global enterprise for business process and document management. Through its broad portfolio of technology, services and outsourcing offerings, Xerox provides the essential back-office support that clears the way for clients to focus on what they do best: their real business. Headquartered in Norwalk, Conn., Xerox provides leading-edge document technology, services, software and supplies for production and office environments of any size. Through ACS, A Xerox Company, which Xerox acquired in February 2010, Xerox also offers extensive business process outsourcing and information technology outsourcing services, including data processing, HR benefits management, finance support, and customer relationship management services for commercial and government organizations worldwide. The 130,000 people of Xerox serve clients in more than 160 countries. For more information, visit http://www.acs-inc.com or http://www.xerox.com. For investor information, visit http://www.xerox.com/investor. Connect with ACS on Facebook or Twitter. For open commentary, industry perspectives and views from events visit http://www.facebook.com/xeroxcorp, http://twitter.com/xeroxcorp, http://twitter.com/xeroxevents, http://www.xerox.com/blogs or http://www.xerox.com/podcasts.
Xerox® and the sphere of connectivity design are trademarks of Xerox Corporation in the United States and/or other countries.
The “Retirement Plan Changes in a Period of Economic Uncertainty” report is available at no cost to the media by contacting Ed Gadowski at 201-902-2825. It is available to other interested parties for $200 from Buck’s Global Survey Resources, 500 Plaza Drive, Secaucus, NJ, 07096-1533. Telephone 1-800-887-0509. It also can be ordered online at www.bucksurveys.com.
Buck Consultants, LLC
ACS, A Xerox Company