Pensions in the private sector

As we debate pension funding in the government sector I think it is important to understand what has and is happening in the private sector.

The following article is by Jerry Geisel for Business Insurance

Number of Defined Benefit Pensions Hits All Time Low

The number of employer-sponsored defined benefit pension plans continues to shrink, according to newly released government statistics.

As of Jan. 23, the number of pension plans covered by the Pension Benefit Guaranty Corp.'s single-employer insurance program fell to an all-time low of 22,697.

That's a drop of nearly 3,000 plans from Sept. 30, 2011, which was the end of the PBGC's 2011 fiscal year.

While the decline in the number of employer-sponsored defined benefit pension plans was especially sharp over that nearly 16-month period, employment-based plans have been withering away for decades.

Except for a slight uptick from 2006 to 2007, the number of private-sector defined benefit plans has declined every year since 1995. 

At 22,697, the number of single-employer plans is about 50% of what it was as recently as 1997, when the PBGC insured just under 44,000 plans, and is about 20% compared to 1985 when the PBGC insured just over 112,000 single-employer plans.

There are many reasons for the decline of defined benefit plans, including increased volatility in the financial markets, which has made it more difficult for employers to predict costs, and low interest rates, which have inflated the value of plan liabilities, boosting required contributions.

The plan statistics are part of a body of pension data tables made available by the PBGC on Wednesday.

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