Watson Wyatt urges Congress to act.

• Author: Marshall, Jeffrey
• Position: Pensions

With new analysis showing the largest U.S. companies continued to shift from traditional pensions to 401(k) plans in 2005, Watson Wyatt Worldwide has urged Congress to act on long-standing funding and regulatory issues affecting pensions. At the same time, the firm's experts say employers should get a true reading of their plans' cost structure and of related workforce management issues before making plan changes.

"As Congress considers a major rewrite of pension laws and the marketplace sorts out the best way to handle employee retirement programs, the defined benefit system finds itself at a very critical stage," said Sylvester J. Schieber, director of U.S. benefits consulting at Watson Wyatt, in an announcement. "Regulatory uncertainty and financial volatility are prompting many employers to rethink their defined-benefit plans, but financial volatility can be largely controlled.

"Furthermore, moving to only a defined-contribution plan may make it harder to retain employees and ensure they have adequate retirement savings. Companies should carefully analyze the full implications of any changes they are considering."

In its analysis of retirement plans at Fortune 100 companies, Watson Wyatt found that 37 percent offered a traditional pension plan to new hires in 2005, compared with 42 percent in 2004 and 50 percent three years ago. In 1985, nearly nine out of 10 Fortune 100 companies offered a traditional defined-benefit plan. The 2005 analysis includes all companies that have announced pension changes to date.

The Watson...