Retirement benefits remained “mostly intact” during recession, Transamerica survey finds


Retirement benefits have remained mostly intact during the Great Recession, with a notable exception of a drop in the number of companies offering defined benefit plans, according to a survey released by the Transamerica Center for Retirement Studies®. Weathering the Economic Storm: Retirement Plans in the U.S., 2007-2012, was released as part of Transamerica’s 13th Annual Retirement Survey.

“The findings reveal surprisingly good news and less bad news than some would expect,” said Catherine Collinson, president of Transamerica Center for Retirement Studies®. “The research brings to light opportunities to improve our current retirement system that can significantly and positively impact workers’ ability to achieve retirement readiness without necessarily requiring sweeping legislation or widespread reforms.”

Fewer DBs, more 401(k)s

The survey found that the number of companies offering defined benefit plans declined from 19% in 2007 to 16% in 2012. Regarding 401(k) or similar plans, the percentage of employers who sponsor a plan increased from 72% in 2007 to 82% in 2012, an increase which was mostly found among small companies with 10 to 499 employees.

Among employers who sponsor a plan, the survey found that the percentage offering matching contributions declined from 80% in 2007 to 70% in 2012. However, the survey found that matching programs are regaining lost ground: of the 17% of employers who said they decreased or suspended their match since 2008, half had already reinstated it.

“Although any reductions in benefits are disappointing, it is somewhat comforting to note that during tough economic times, employers were more likely to suspend their matching contributions than drop their plans altogether, which would have had far worse implications,” said Collinson.

Increases in plan features

A significant number of employers who sponsor a plan have also made more features available to workers in the last five years, with the proportion of large companies offering “automatic” features increasing from 31% in 2007 to 45% in 2012. Among those employers, 84% have adopted a Qualified Default Investment Alternative. The percentage of plan sponsors adopting the Roth feature to their 401(k) plans has increased from 19% in 2007 to 32% in 2012.

One likely reason retirement benefits have continued to receive support from employers through a tumultuous economic environment is that a vast majority of employers (82% in 2012) reported that they consider a retirement plan an important tool for attracting and retaining talent.

Employees remain committed to retirement savings

The survey found that the number of employees who are confident about their ability to comfortably retire declined from 59% in 2007 to 51% in 2012. Nonetheless, workers have remained committed to saving for retirement. Among workers offered a 401(k) or similar plan, participation rates stayed strong and steady at 77% and, in 2012, annual salary deferral rates returned to their 2007 level of 7% (median) after having dipped slightly to 6% (median) in 2009/10 and 2011.

Source: Transamerica Center for Retirement Studies press release.

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For more information on this and related topics, consult the CCH Pension Plan Guide, CCH Employee Benefits Management, and Spencer’s Benefits Reports.

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