State:
Free Special Resources
Get Your FREE Special Report. Download Any One Of These FREE Special Resources, Instantly!
Featured Special Report
Claim Your Free Cost Per Hire Calculator
This handy calculator lets you plug in your expenses for recruiting, benefits, salaries, and more.

Graphs automatically generate to show you your annual cost per hire and a breakdown of where you are spending the most money.

Download Now!
January 23, 2003
Companies Expect Spike in Pension Expenses
For a Limited Time receive a FREE Compensation Market Analysis Report! Find out how much you should be paying to attract and retain the best applicants and employees, with customized information for your industry, location, and job. Get Your Report Now!
January 23, 2003


Many companies are facing huge expense increases this year to make up for investment losses in their pension plans, according to a new survey from Deloitte & Touche LLP, a human resources and employee benefits consulting firm.

The increases in pension expenses could undercut corporate earnings growth this year and potentially dampen an economic recovery, according to the authors of the study.

In the survey of 80 mid-sized and large companies, 40 percent of respondents say their pension expenses will rise by more than 50 percent in 2003. Another 20 percent expect increases of 26 percent to 50 percent while 16 percent of respondents see expenses growing between 11 percent and 25 percent.

Largely driven by this enormous funding squeeze, more than four out of ten companies are either making or considering making fundamental changes to their defined benefit plans, the survey found. Twelve percent have already decided on changes and 31 percent are evaluating possible alternatives, such as changing to cash-balance or profit-sharing plans.

"Companies that change their pension plans solely because of stock-market volatility and the current higher expenses could be making a serious mistake," says David Hilko, practice leader of the employee benefits group for Deloitte & Touche's Chicago office. "Recruiting and retention strategies should drive benefits."

"Changes now won't fix the funding issue," Hilko adds. "The companies still must make up these major shortfalls under IRS rules. What's more, benefit expenses often rise in the short term when companies switch plans, which would simply add to the current expense crisis."

Another area of growing interest among companies is to secure a greater portion of an executive's retirement benefits, according to the survey. Nearly one in three companies surveyed has shifted or is exploring ways to shift a greater percentage of their executive benefits into more secure investment vehicles.

"More executives will require greater security as part of any employment contract," Hilko says. "While this approach is state-of-the-art for now, it soon will become standard."

The survey polled senior financial and human resources executives from 80 companies from a broad cross-section of industries with median revenue of $1 billion and an estimated average of 5,000 employees.


Links
Featured Free Resource:
Cost Per Hire Calculator
   
   
 
 
Twitter  Facebook  Linked In
Follow Us
CT-WEB06
Copyright © 2016 Business & Legal Resources. All rights reserved. 800-727-5257
This document was published on http://Compensation.BLR.com
Document URL: http://compensation.blr.com/Compensation-news/Benefits-Leave/ERISA/Companies-Expect-Spike-in-Pension-Expenses/