For starters, fewer companies are still offering pensions, with the share of Fortune 500 companies that provide them to new hires falling to 24 percent at the end of 2013 from 60 percent in 1998.
Alan Glickstein, a senior retirement consultant at Towers Watson, says the drop in the number of employers offering pensions is stabilizing. “There’s a move away from pensions, that’s nothing new,” he says. “But the move is slowing.”
The most common type of defined benefit plan offered to new hires is a hybrid pension, which is a combination of 401(k) plan and a cash balance fund and is typically less generous than a traditional pension. Fourteen percent of the companies studied offered hybrid plans in 2013, unchanged from the previous year.
Only 7 percent of employers studied offer new employees traditional pensions, which pay out a certain amount at retirement based on a worker’s pay and how long they stayed with a company.
So where can you still get a job with a pension? The plans are more prevalent in some industries versus others. For instance, defined benefit plans are still offered by most large insurance and utility companies, according to Towers Watson. But the plans are nonexistent among aerospace, construction and tourism companies, which only offer defined contribution plans, such as a 401(k) plan.
Utilities companies may have been able to preserve their retirement plans because they tend to be heavily unionized, Glickstein says. Some employers may be using pensions and other defined benefit plans to encourage people to retire at a good time, since the nature of the work can be physically demanding, he adds. Utilities companies may also have an easier time passing along pension costs to customers than companies in other industries, where pricing needs to be more competitive.
As for insurance companies, many of them are mutually owned by policy holders, Glickstein says, which means they don’t have to report their pension costs to shareholders and may have more control over the perks they are able to offer. All of the Fortune 500 companies studied offered defined contribution plans to employees.