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What DB Plans Cost Employers: Figures and Trends

Many factors influence costs to employers that provide employees with access to a defined benefit plan. In the February 2016 edition of the Beyond the Numbers, a blog by the Department of Labor’s Bureau of Labor Statistics (BLS), the BLS looks at how those costs fluctuate by industry, occupation, establishment size and region, and reviews trends from 2008 to 2015.

The BLS says that in March 2015, average costs for private-sector employers to provide DB plans were approximately 61 cents per employee hour worked — but that figure was higher when only private-sector employers that actually offer a DB were considered.

The BLS found that many factors influence costs to employers that provide employees with access to a DB plan.

Costs by Industry


Highlights of how the costs have changed in these industries in the following ways.

  • Goods-producing industries: $2.73 per employee hour worked in March 2008 to $4.48 in March 2015; and
  • Service-providing industries: $1.79 per employee hour worked in March 2008 to $3.00 in March 2015.
The BLS notes that for construction industries, the average costs were more than $5 per employee hour worked through the period; it suggests that the higher expenditures may have to do with higher rates of unionization in that sector.

Regional Differences

The Middle Atlantic was the region that had the highest access to DB plans. The results, by region:

  • Middle Atlantic: (New Jersey, New York and Pennsylvania): 25%
  • East North Central (Ohio, Indiana, Michigan, Illinois, Wisconsin): 20%
  • New England (Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, Vermont): 19%
  • Pacific: (Alaska, California, Hawaii, Oregon, Washington): 19%
  • West North Central (Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South Dakota): 18%
  • South Atlantic (Delaware, Florida, Georgia, Maryland, North Carolina, South Carolina, Virginia, West Virginia): 17%
  • West South Central (Arkansas, Louisiana, Oklahoma, Texas): 15%
  • Mountain (Arizona, Colorado, Idaho, Montana, New Mexico, Utah, Wyoming): 13%
  • East South Central (Alabama, Kentucky, Mississippi, Tennessee): 12%
Costs by Establishment Size

Large workforce does not necessarily translate to higher costs per employee for providing a DB plan, the BLS found. It research says that for employers with 100-499 employees, the cost per employee hour worked was $1.31 in 2010 and $3.14 in 2015; for employers with 50-99 employees, that cost rose from $2.15 in 2010 to $4.08 in 2015.

Generosity and Funding

Required employer contributions for DB plans may fluctuate depending on a company’s investment returns, and employers have some latitude in deciding when to make payments, notes the study, within the parameters of legal and accounting guidelines and requirements.

And the degree to which a plan is funded affects contributions, as well, the BLS says. The study says that when plans are underfunded, employers have to catch up and may make additional contributions, and when plans are overfunded, employers might not make regular contributions.

The BLS also observes that plans that are more generous have higher associated costs. And it found that the costs for DB plans of union workers tend to be higher than those for nonunion workers.

Eligibility and Plan Features

Eligibility and plan features also affect participation and therefore costs, the BLS says. It notes that freezing plans and providing less generous plan provisions, benefits and features are ways by which employers cut the cost of providing a DB plan.