The average employee lives longer and this reality is a substantial burden to corporations with legacy pension plans. While defined benefit plan participation has been dropping consistently over the last three decades, companies still struggle to meet their payout obligations.
Larger companies tend to still have a higher proportion of employees in defined-benefit plans. According to 2014 data from the Bureau of Labor Statistics, 41% of workers at companies with 500 employees or more participate in such plans, compared with just 16% in the U.S. private sector as a whole. Overall, there were 15.7 million active participants in private-sector defined-benefit pension plans in 2012, according to the Labor Depatment. That represents a 48% decline from 1980, which was the peak of participation in such plans. “Most of the major plans are certainly going to be affected in a meaningful way” by the mortality changes, said Bruce Cadenhead, chief actuary for the U.S. retirement business at Mercer, another consulting firm.