Wholesale changes are in store for both pension and 401(k) plans, according to a survey of 140 financial executives by Prudential Financial and CFO Research Services.

Nearly half of the financial executives at companies with pension plans said their firms were considering freezing or terminating their pension plans in the next two years. Seventeen percent have already closed their DB plan to new entrants, and 27% said they are likely to do so in the next two years.

Forty-five percent said their pension plan performance has had a substantial impact on their company’s financial performance in the past year, and 57% said reducing the volatility of their plans’ funding status is a high priority.

As a result, 74% said their companies are undertaking a risk assessment of their pension plans, 66% are adopting a more conservative asset allocation strategy, and 60% will be increasing contributions to their DB plans.

As far as 401(k)s and other defined contribution plans are concerned, 63% said they are more concerned than they were a year ago about employees who are financially unable to retire and who will probably remain in their position for as long as possible. Because of the market’s tremendous losses in 2008, 44% said they are adding products to their retirement plans that will help protect investors against market declines.

In addition, 59% of DC plan sponsors are more concerned about fiduciary risks than they were a year ago, 58% are concerned about the cost of matching contributions, and 59% are taking a closer look at administration costs.

Twenty percent said they have already ceased employer contribution matches in their 401(k)s, and 46% plan to suspend these matches over the next two years. That said, 60% said they will increase automatic enrollment and contribution escalation efforts within the next two years.

Subscribe Now

Access to premium content including in-depth coverage of mutual funds, hedge funds, 401(K)s, 529 plans, and more.

3-Week Free Trial

Insight and analysis into the management, marketing, operations and technology of the asset management industry.