For the past few years, retirement has seemed like
a pipe dream for many Americans. The financial meltdown that occurred six years
ago decimated the retirement accounts of many Americans, and U.S. employment
numbers are still limping back to pre-recession levels. Add to that the wage
stagnation the U.S. has seen over the past decades and it is easy to see how
retirement is out of reach for many Americans.
A new report on the popularity of different retirement plans
begins to make sense. The report, released by professional services firm Towers
Watson, shows that defined contribution (DC) retirement plans such as 401(k) plans
are still the most popular option for employers, though their growth slowed
significantly last year.
The firm’s research shows that in 2013 fewer U.S. companies
cut traditional defined benefit (DB) retirement plans from their new hire
offerings last year than in any year since 2003. Only five Fortune 500
companies fully cut their DB offerings during 2013.
The insurance and utilities industries in particular have
resisted the shift away from DB retirement plans. The report claims that over
half of companies in those sectors are still offering DB plans to employees.
Towers Watson points out that, ironically, insurance industry employees may
have a better understanding of why DB plans can be more beneficial for them.
Though these trends could be taken as a good sign for
workers wishing to keep their livelihoods out of the market, DC plans are still
steadily rising in popularity. The Towers Watson report shows that only 118
Fortune 500 companies now offer any type of DB plan – a record low down from
299 just 15 years ago. The number of Fortune 500 companies offering only DC
plans to their new hires hit an all-time high of 382 in 2013.
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