Corporate America is selectively reviving traditional pension plans after decades of freezes, a move driven by improved funding levels and pressure to compete for workers in tight labor markets.
Cash balance plans, a defined benefit pension structure, have grown measurably. Nearly 26,000 U.S. employers offered these plans in 2023, up from roughly 23,000 in 2020, though most are small businesses.
Improved pension fund finances are enabling this shift. The 100 largest U.S. corporate defined benefit pension plans improved their funded status by $25 billion in July, pushing their aggregate funded ratio to 112.1 percent as of July 31.
"Improved funding status creates opportunities that were not available when plans faced underfunding," said Zorast Wadia, principal and consulting actuary at Milliman. "This includes reconsidering frozen plans or adopting cash-balance designs."
Major employers including Coca-Cola, IBM, Verizon, Sprint, Lockheed Martin, Hewlett-Packard and Alcoa froze pensions over the past decade, affecting 26 million workers. A handful now view pension reintroduction as a targeted tool for labor negotiations and talent acquisition, particularly in high-skill sectors and unionized industries.
The revival remains narrow. Widespread return to pension-based retirement systems is unlikely. Instead, employers are using plan reopenings strategically to address specific competitive labor challenges and settlement terms with union workers.
