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Member, Beacon International Group, Ltd.
Some 35.5% of Fortune 1000 companies that have defined benefit pension plans have frozen at least one such plan, according to a new analysis.
There are 586 employers on this year's Fortune 1000 list that sponsor defined benefit plans and 208 have frozen at least one plan, according to New York-based benefit consultant Towers Watson & Co.'s analysis of Securities & Exchange Commission filings.
That 35.5% is up from 2009, when 31.3% of 607 Fortune 1000 companies had frozen at least one defined benefit plan.
In 2004, as the corporate drive to freeze defined benefit plans was gathering speed, only 45, or 7.1% of 633 Fortune 1000 companies with defined benefit plans, had frozen at least one plan.
In a freeze, a company continues its defined benefit plan, but future accruals for some or all participants stop.
Employers have taken the step for a variety of reasons, including cutting retirement plan costs and reducing the volatility of required contributions, which can fluctuate significantly due to changes in interest rates and investment results.
The most recent Fortune 1000 company to announce a pension plan freeze was Caterpillar Inc. The Peoria, Ill.-based construction equipment manufacturer last month said that nonunion employees hired on or after Jan. 1, 2011, will not be eligible for the defined benefit plan. In addition, the effective date of the freeze for current employees will vary based on their age and when they were hired.
The analysis is available at http://www.towerswatson.com/united states/newsletters/insider/2761.