Wharton Pension Research Council Working Papers

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Working Paper

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This chapter examines the factors that affected plan sponsors’ decisions to convert a traditional defined benefit (DB) plan to a hybrid design during years 2000-2010. We use combined plan level data from Form 5500 filings and financial information from 10-Ks of Fortune 1000 companies to ascertain how the financial status of the plan sponsor, pension plan funding, and costs affected a decision to convert from a traditional DB plan to a hybrid design. We also explore the timing of such conversions relative to major changes in federal regulations, specifically the passage of the Pension Protection Act of 2006 and the ensuing regulations as well as in response to the economic crisis. We examine whether firms that converted in the early part of the decade did so for reasons that were different than those who converted in later part of the decade. We assess the role of the financial status of the plan sponsor in the conversion decision and compare this to the influence of the plan funding ratio, the investment patterns, and the overall plan cost. We also describe the influence the economic crisis is likely to have on the choice of plan type.


The published version of this Working Paper may be found in the 2012 publication: Reshaping Retirement Security: Lessons from the Global Financial Crisis.

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Copyright/Permission Statement

All findings, interpretations, and conclusions of this paper represent the views of the authors and not those of the Wharton School or the Pension Research Council. © 2011 Pension Research Council of the Wharton School of the University of Pennsylvania. All rights reserved.

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Date Posted: 28 June 2019