Fear of lawsuits is no longer a deterrent for companies considering a hybrid plan, which have been gaining in popularity. Fortune 500 companies, including UPS (UPS - Get Report), SunTrust (STI), Dow Chemical (DOW - Get Report), Coca-Cola (KO - Get Report) and FedEx (FDX - Get Report), see the plans as a cost-efficient alternative to traditional pension plans. Other attributes are that their funding is more predictable, and they're easier to explain to employees than traditional DB plans. Employees are enticed by a plan that looks like a standard 401(k) plan but is guaranteed a positive rate of return.
"Given the exposed weaknesses of 401(k) plans, employers would be more likely to adopt hybrid plans if they were supported by clearly defined regulatory guidance around their implementation," says Kevin Wagner, senior retirement consultant at Watson Wyatt (WW).
-- Reported by Joe Mont in Boston.