The decline of traditional pensions and rise of 401(k) and profit-sharing retirement plans continued in 2009. There was a net loss of 50 traditional pensions and a net gain of 84 defined contribution plans in fiscal year 2009, according to Internal Revenue Service data released this month. However, fewer workers participated in both types of retirement plans.
Some 1,400 new traditional pension plans were created between October 2008 and September 2009 with 422,199 new employees enrolled. But 1,450 pensions were terminated and 685,815 people lost the ability to continue to participate in their traditional pension. Workers with terminated pensions generally did not lose the pension benefits they had already earned, which are insured by the Pension Benefit Guaranty Corporation up to certain annual limits.
There were 1,929 new defined contribution plans created in 2009, while 1,845 plans were terminated. However, there was a huge drop in the number of people enrolled in 401(k) plans. Just over 1 million people signed up or were automatically enrolled in a newly-created defined contribution plan last year, but almost 1.7 million employees saw their 401(k) or profit-sharing plans terminated. Overall, in the U.S. last year there were 6,209 traditional pensions and 11,638 401(k)s and profit-sharing retirement plans.