Pension Plan Freezes Continue at Steady Pace Among Fortune 1000 Companies, Watson Wyatt Analysis Finds
2009年7月23日 - 12:36AM
PRニュース・ワイアー (英語)
Separate Research Finds Freezes Do Not Increase Stock Price
WASHINGTON, July 22 /PRNewswire-FirstCall/ -- The number of Fortune
1000 firms that have a frozen pension plan increased again this
year as companies continue to look for ways to control their
retirement benefit expenses, according to an annual analysis by
Watson Wyatt, a leading global consulting firm. Meanwhile, a
separate study by Watson Wyatt found that freezing a pension plan
does not lead to a boost in a company's stock price. The Watson
Wyatt analysis found that 190 firms on the 2009 Fortune 1000 list
have a frozen defined benefit (DB) pension plan, compared with 169
companies last year and only 45 six years ago. Overall, the rate of
DB plan sponsorship in the Fortune 1000 decreased slightly to 61
percent in 2009 from 63 percent in 2004. The number of DB plan
sponsors with frozen plans has been increasing steadily since 2004
Number of Percentage of Fortune 1000 Number of DB sponsors DB plan
sponsors list year DB sponsors with frozen plans with frozen plans
2009 607 190 31.3% 2008 624 169 27.1% 2007 638 138 21.6% 2006 627
113 18.0% 2005 627 71 11.3% 2004 633 45 7.1% The analysis also
found that industries with higher DB plan sponsorship rates, such
as utilities and manufacturing, are less likely to freeze a plan
than those with lower sponsorship rates. However, companies in
industries that have been severely affected by the economic crisis
-- financial services and automobile industries in particular --
are exceptions. Almost half of the DB plan sponsors in the
financial services industry and one third of the DB plan sponsors
in the automobile industry have frozen plans. "As companies in
industries that have suffered through the crisis struggle to keep
their heads above water, freezing or closing pension plans may seem
like an effective way to cut costs," said Alan Glickstein, senior
retirement consultant at Watson Wyatt. "However, this strategy
could come with substantial hidden costs -- for employers, who
could face increased difficulties in managing the retirement of
their workforces, and for employees, who could face reduced
retirement resources as a result of a frozen pension plan or a
reduced 401(k) match." A separate Watson Wyatt analysis found that
freezing pensions does not have a positive effect on companies'
market value. The analysis of 82 publicly-traded companies that
froze or closed their pension plans between 2003 and 2007 found
that there is an insignificant or negative impact on stock prices
associated with the announcement of a pension freeze or close.
Refuting conclusions of previous research, in 71 out of 82 cases
the stock prices of companies did not change significantly in the
23 days around an announcement of retirement plan changes. In the
cases where such an announcement did have a statistically
significant effect, more often than not the employer's stock price
decreased. "Freezing a plan may produce some accounting gains, but
it will not provide companies with long-term cash flow relief
(either absolute level or volatility) for many years," said Mark
Warshawsky, director of retirement research at Watson Wyatt. "Also,
even if these freezes do lead to savings, there will be no
immediate positive effect on firm value, which could even become
diminished in the long run if employees begin to view the firm as
an uncompetitive employer in light of its shrinking commitment to
retirement and its transfer of risk to employees." For more
information, read the Watson Wyatt Insider article available at:
http://www.watsonwyatt.com/Fortune1000pensionfreezes. To view the
study of the effect of pension freezes on company stock price
published in the Financial Analysts Journal, please visit:
http://www.cfapubs.org/doi/pdf/10.2469/faj.v65.n4.2 About Watson
Wyatt Watson Wyatt (NYSE:WWNASDAQ:WW) is the trusted business
partner to the world's leading organizations on people and
financial issues. The firm's global services include: managing the
cost and effectiveness of employee benefit programs; developing
attraction, retention and reward strategies; advising pension plan
sponsors and other institutions on optimal investment strategies;
providing strategic and financial advice to insurance and financial
services companies; and delivering related technology, outsourcing
and data services. Watson Wyatt has 7,700 associates in 33
countries and is located on the Web at http://www.watsonwyatt.com/.
DATASOURCE: Watson Wyatt CONTACT: Ed Emerman for Watson Wyatt,
+1-609-275-5162, ; or Steve Arnoff of Watson Wyatt,
+1-703-258-7634, Web Site: http://www.watsonwyatt.com/
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