Though it seems like nothing will bring back DB plans (perhaps for good reason), it does cost more to run a DC plan than a DB plan, according to research conducted with private companies in March 2012 by the Bureau of Labor Statistics. Overall, the cost to run a DC plan was 40% higher per employee.
Part of the reason for higher costs per employee is that more people participate in DC plans than in DB plans (41% v. 17%), so the fixed costs of running a DC plan are spread across a larger base. There are differences by business type and company size, with unions paying much more for DB plans because of greater participation. On average, DC plans cost more to run for larger companies and those in the professional services and management industries.
Not calculated is the cost of the risk transfer in DC plans from DB. With uncertain markets and slow economic growth likely, companies seem more than happy to pay higher costs to run a DC plan now rather than face funding liability down the road.
