PPA Stabilizes Hybrid Plan Use

By Staff Writer

May 10, 2007 at 01:04 PM

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Large U.S. employers continued to shift away from use of traditional defined benefit plans in 2006, but their use of hybrid plans held almost steady.

Researchers at Watson Wyatt, Washington, have published data supporting that conclusion in a review of pension plan design at the Fortune 100 companies.

The number of the top 100 companies that offer any kind of defined benefit plan fell to 58 in 2006, from 63, and the number that offer traditional defined benefit pension plans fell to 31, from 35.

The number of companies studied that offer "hybrid defined benefit plans," which are insured by the Pension Benefit Guaranty Corp. but incorporate some features commonly associated with defined contribution plans, such as account balances, fell only slightly, to 27, from 28, Watson Wyatt researchers report.

Large employers may have been more apt to keep cash balance plans and other hybrid plans in 2006 because Congress included a provision confirming the legality of the plans in the Pension Protection Act of 2006, Watson Wyatt researchers say.

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