By: Russ Kamp, Managing Director, Ryan ALM, Inc.
First recognized by the United States Congress on May 15, 2006, Endangered Species Day falls every year on the third Friday in May. The day is intended to raise awareness about protecting endangered species and their habitats. Endangered species not only include mammals, such as the African elephant or panda bear, but all living things including animals, birds, insects, plants, and other organisms.
I think that this is a critical effort, and it should be given as much consideration as possible. That said, I am not trying to trivialize it when I suggest adding to this list defined benefit (DB) plans, which have seen a tremendous decline in their use since the 1980s. As recently as the late 1980s, there were an estimated 114,000 DB plans within the private sector covering more than 40% of the private sector workforce. Regrettably, the number of companies offering DB plans is down to just over 43,000 as of 2021 with many of those no longer accruing benefits for participants or accepting the enrollment of new employees. Fortunately, DB plans are still being used to a greater extent among public sector sponsors (roughly 5,400 covering 80+% of public sector employees) and unions where there are approximately 1,400 multiemployer plans.
The private sector participation in DB plans has been replaced by defined contribution (DC) plans, where companies are asking untrained employees to fund, manage, and then disburse a “retirement” benefit with little ability to execute that responsibility. As of 2021, there were roughly 638,000 employer-sponsored DC plans. Yet, not every worker is covered by a retirement plan, as there are about 33 million small businesses in the country with a significant percentage employing 10 or fewer workers. As we’ve previously reported, the median balance for those that are covered was a measly $24,503 (2020). Given that reality, providing workers with the means to achieve a dignified retirement is what is truly endangered.