Companies’ pension plans have rebounded with recent improvement in the stock market, but employers are still examining ways to shed those plans, according to a survey by Prudential Financial.
Prudential, which has its retirement insurance and annuity division in Hartford, said 35 percent of the 182 companies surveyed have already closed their pension plans to new entrants, while another 25 percent have frozen them.
More than half of the companies said they are likely to offer lump sum distributions to plan participants by 2016.
Employers said pension plans impact earnings and constrain balance sheet leverage and cash. Compared to a 2010 survey, a higher number of companies, 39 percent, said they were open to purchasing annuities to cover some or all of their pension obligations, and turning over the administration and distribution of benefits to an insurance company. Prudential, which offers retirement plans, annuities and services, refers to that as a “liability transfer strategy.”
The survey targeted companies with pension plan assets of $250 million or more.
Companies said they are also looking to enhance defined contribution offerings for their employees, such as 401(k)s, the survey found.
More than half of employers believe a significant portion of their workers will have to delay retirement because of a lack of savings.
Partly because an older workforce could mean higher healthcare costs, employers said they were interested in automatic savings enrollments, stable value funds, and guaranteed income products such as annuities.
Only 5 percent of companies surveyed already offer guaranteed income products, but 50 percent said they are likely to do so in the next two years.
