Towers Watson says fewer companies today are actively moving away from DB plans and establishing DC plans for new salaried employees than at any other point over the past decade. The analysis also suggests a few industry sectors—notably the insurance and utilities sectors—are bucking the general trend of moving from DB to DC retirement plans. More than half of the companies operating in the insurance and utilities sectors still offer DB and DC retirement plans to new salaried employees.

The prevalence of DB plans has clearly taken a hit from historic highs, however. The Towers Watson analysis found only 118 Fortune 500 companies, or roughly 24%, offered any type of DB plan to new hires as of the end of 2013. This is down from 299 companies, or 60%, just 15 years ago.

While the number of Fortune 500 companies with open DB plans reached yet another record low in 2013, the number of companies (five) that moved away from DB plans last year is the lowest number to shift from DB to DC per year in more than a decade. Nearly half of the companies that no longer provide DB benefits to new employees still have active employees who are accruing benefits.

Among companies still offering DBs to new employees, 84 offer a hybrid plan and 34 offer a traditional pension plan, according to Towers Watson. Traditional pension plans have taken the hardest hit during the overall shift from DB to DC plans, whereas hybrid pension plans have held relatively stable. More than half of the employers that established a hybrid plan—most often a cash balance plan—either before or after 1998 still offered the plan to new hires in 2013.

The analysis found striking differences in the retirement benefit offerings of different industries. Among insurance companies, 66% offer a pension with a supplemental DC option to new hires, while 59% of utilities do so. Utilities tend to have lower turnover and more long-term career workers than other sectors, Towers Watson says, which can be favorable for retirement readiness. 

The insurance sector includes mutual insurance companies that are not publicly traded, and these companies face different external pressures and have different objectives from other industries, the firm notes, leading to less pressure on DBs. Additionally, due to the nature of their work, insurance industry employees may be more inclined to understand and appreciate DB plans than workers in other sectors.

The high-tech, services and retail sectors have historically had low DB sponsorship rates, and DC plans are likely a better fit for their business needs, Towers Watson says. In fact, overall DB plan sponsorship for these sectors never exceeded 36%.

“It’s noteworthy that DB plans still serve certain industries and companies well, especially those with particular talent and retention needs,” says Kevin Wagner, senior retirement consultant at Towers Watson. “At the same time, the broader shift from DB to DC is helping fuel growing concern over employees’ ability to retire comfortably. As a result, employers will need to carefully consider their overall retirement plan strategies to make sure whatever plans they offer new employees will help them with their retirement readiness efforts and align with their expectations.”

“With DC plans steadily becoming the primary retirement vehicle for millions of workers, more responsibility and risk is being shifted to employees,” says Alan Glickstein, senior retirement consultant at Towers Watson. “Employees must increasingly take ownership of managing their own contribution levels, investments and distributions. The move also carries risks for employers, such as having workers delay retirement when market performance is poor, which in turn can result in higher benefit costs and less mobility within their organizations.”

More about the analysis and other Towers Watson research is at http://www.towerswatson.com/.