After several years of freezing or closing pensions, nearly three-quarters of US employers will leave their plans alone this year. 

That's because they're focused on other ways to manage their plan's financial risks, given requirements put forth in the 2006 Pension Protection Act, according to a study of 190 mid- to large-sized  companies by consulting firm Hewitt Associates. The decision not to alter pensions in 2008 marks a sea change from last year when nearly 60 percent planned some sort of modification. 

The potential for a cut in benefits has been a big concern among boomers who are counting on employer-sponsored retirement plans to finance their retirements.

“Over the past several years, we’ve seen a significant number of companies make plan design changes, including freezing or closing their defined benefit plans, which is due, in part, to stricter funding rules and increased costs and cost volatility,” said Alison Borland, who leads the defined contribution consulting practice at Hewitt. “This year, we see companies investigating alternate methods of improving pension plan management, which mitigates financial and other risks that can be created by these benefits.”

About 3 percent of employers said they are very likely to close their pension plans to new hires in 2008, down from 6 percent last year. Meanwhile, 2 percent said they are likely to freeze their plan to all participants, a drop from the 4 percent reported in 2007.

Even though more than half of companies rank employee accountability for retirement as a high priority, Borland said employers "are taking more aggressive steps to equip workers with tools and information that can help improve saving and investing habit."

Performance Reviews
Recent legislation, current litigation and regulations from the Internal Revenue Service and Department of Labor are putting employers under pressure to manage two sides of the retirement equation: minimizing risks and unnecessary costs, while maximizing the benefit employees get from their retirement programs. Last month, the Supreme Court even ruled that individual 401(k) participants can sue under a pension protection law to recover losses.

Among those companies offering traditional pension plans, almost two-thirds said they are very likely to perform funding and accounting projections to ensure the plan is financially sound; 30 percent plan to perform an asset liability study to test the portfolio and its ability to satisfy return expectations; and 29 percent are very likely to assess the risks that their pension plans are running based on current strategies.

More than half of companies offering a defined contribution plan, such as a 401(k), will review their fund operations, including expenses and revenue sharing. Fiduciary responsibility is also a focus, with 35 percent of companies saying they'll review their 401(k) plan governance structure or hire a third-party to review investment options.

Most employers will try to tell their employees more about retirement savings plans. Two-thirds of companies will undertake an initiative on 401(k) plan participation, and 64 percent are likely to communicate to their employees about diversification and fund usage. In addition, 58 percent plan to focus their communication efforts on 401(k) contribution levels.