Fortune 100 companies were once employers where workers were likely to get gold-plated retirement benefits. But that’s no longer the case, at least for new hires. Less than half (45 percent) of Fortune 100 companies currently offer traditional or hybrid pensions to new hires, according to a new analysis by consulting firm Watson Wyatt, down from 49 percent in 2008 and 90 percent in 1998. New employees will only be offered a 401(k) or similar type of retirement account at 55 percent of Fortune 100 companies this year. Last year was the first time 401(k) plans outnumbered traditional pension plans among Fortune 100 companies.
“New and younger employees will be the first generation to rely on 401(k) plans exclusively for their retirement savings,” says Alan Glickstein, a senior retirement consultant at Watson Wyatt. “It’s a big burden for them to carry as recent events have made all too clear.” But 401(k)s have long been the dominant retirement plan for most workers. Among all private sector employees with a retirement plan, more workers participated in a 401(k)s than a traditional pension beginning in 1989, according to the Center for Retirement Research at Boston College. This week, CIGNA Corp. joined at least 16 other large companies that have announced they will freeze their pension plans since the beginning of the year. Typically pension freezes halt the accrual of new retirement benefits in the plan and/or stop new employees from joining. Sometimes companies offer enhanced 401(k) contributions after putting pension plans on ice.