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WASHINGTON, DC, May 3, 2002 - The pace at which large companies are making the switch to so-called hybrid pension plans appears to have slowed considerably. Thirty-three percent of the Fortune 100 companies offer employees hybrid pension plans, a slight increase from 32 hybrids for the same group in 2000. Fifty percent currently offer a traditional defined benefit plan, down from 52 over the same two-year period, according to a new analysis by Watson Wyatt Worldwide.

"As the conversion to hybrid pensions has drawn attention from Congress over the past two years, the price tag for these conversions has escalated," says Eric Lofgren, director of the benefits consulting group at Watson Wyatt. "The companies that have recently adopted hybrid plan designs are mainly those that want to facilitate a cultural change or for whom a traditional career-long employment model is simply no longer realistic -- not companies looking to generate cost savings."

Today, 33 percent of the companies in the Fortune 100 offer hybrid pension plans. That is up from just one company in 1985. At the same time, the number of companies in the Fortune 100 offering only a defined contribution plan has risen from ten companies during the 1980's through 1998, to 17 today.

Distribution of Pension Plans Among Fortune 100 Companies

Type of Plan	Percentage of Companies
	1985	1998	2000	2002
Traditional Pension Plan*	89%	68%	52%	50%
Hybrid Pension Plan*	1%	22%	32%	33%
Defined Contribution/401(k) only	10%	10%	16%	17%

* Most of these firms also have a 401(k)

Lofgren notes that some employers may be holding off on plan conversions as they await further clarification of the legal status of hybrid plans, in the wake of recent litigation.

"The recent slowdown in the trend toward hybrids also supports the notion that no one plan design is right for every company," says Lofgren. "Predictions by some that almost all large employers would abandon traditional plans in favor of hybrid plans and/or defined contribution-only approaches simply aren't coming true. The U.S. retirement system remains a mosaic where employers adopt different plan designs to meet varying business objectives and workforce needs.

"The question for the future is whether this latest analysis shows that we're approaching a plateau in the percentage of hybrids, or whether we are at an inflection point and will soon see the trend shift toward a return to traditional designs as the working population ages," says Lofgren.

Watson Wyatt is a global consulting firm specializing in human capital and financial management. The firm offers services in three areas: employee benefits, eHR and human capital strategies. Watson Wyatt has more than 6,200 associates in 87 offices in 29 countries.

For more information contact Ed Emerman at (609) 452-5967.