Pensions were once considered a relic of corporate America, seemingly destined for extinction. Today, however, a small but growing number of companies are reviving this traditional benefit to win over employees in highly competitive labor markets and to settle complex negotiations with labor unions.
At 27 years old, Matthew Cronin is among 600 workers who recently secured this coveted benefit from PECO, Pennsylvania’s largest electric and natural gas utility. While he plans to continue contributing to his 401(k), Cronin views the pension as a crucial buffer against anticipated cuts to Social Security.
“Having a pension is a big motivator to staying with the company,” said Cronin, a consultant who helps customers connect to the grid.
PECO joins a notable roster of employers—including IBM, meat-processing giant JBS Foods, and New York-based Northwell Health—that are either reopening or launching new pension plans.
Unlike 401(k)s, traditional pensions are funded by employers and guarantee a lifetime retirement check. However, the 2008 financial crisis devastated these plans. Plummeting stocks and stringent new funding requirements forced many companies to freeze their pensions and shift employees to 401(k)s. Consequently, private-sector participation in pensions plummeted from roughly 30% in 1988 to less than 10% in 2024, according to the Employee Benefit Research Institute. (Government workers remain much more likely to have one.)
The modern revival is largely driven by structural innovations that mitigate financial risk for employers. As John Lowell, a pension consultant at October Three, explains, companies have increasingly adopted "cash balance" pension plans. Instead of promising unpredictable lifetime benefits based on final salary, employers credit employee accounts with a preset percentage of annual pay, often guaranteeing a return tied to Treasury yields. Some newer plans even offer market-linked returns, shifting the bulk of investment risk to the employee.
Olivia Mitchell, a pension expert at the University of Pennsylvania’s Wharton School, notes that these adaptations have significantly reduced the funding uncertainties that once made pensions so unappealing to corporate balance sheets.
“We aren’t going back to a pension-based system,” Mitchell observes, “but there is a selective revival under way.”
The data supports this trend. According to FuturePlan by Ascensus, nearly 26,000 employers—predominantly smaller firms—offered cash balance plans in 2023, up from approximately 23,000 in 2020.
Favorable market conditions are also accelerating this rethink. Rising stock prices and higher bond yields have made it easier for companies to meet future payout obligations. In fact, many active and dormant pension funds now boast surpluses. The top 100 U.S. corporate pensions currently hold enough assets to cover 112% of their liabilities, a stark improvement from 77% in 2012, according to pension consulting firm Milliman.
Labor unions have been instrumental in capitalizing on this shift. Airlines like Delta and Southwest recently launched cash balance plans for their pilots following union advocacy. “There is a groundswell from the participant side to get these things going again,” said Zorast Wadia, a principal at Milliman.
Real-World Rollouts
Earlier this year, JBS Foods began contributing to a new pension for its roughly 26,000 hourly workers. Jointly managed with the United Food and Commercial Workers International Union, the plan is open to workers from other meatpacking companies and primarily provides lifetime income rather than lump-sum payouts. The union championed the plan after noticing low 401(k) participation among hourly workers earning an average of $24 an hour.
However, Jim Ridderbush, a union steward at JBS’s Green Bay, Wisconsin, plant, acknowledges a generational divide: “The older workers are excited, but the younger kids don’t really understand what a pension is. It’s a dinosaur.”
Similarly, Northwell Health rolled out a traditional pension last summer for its nurses and administrative staff, factoring tenure and the last 10 years of pay into the benefits formula. Gregg Nevola, Northwell’s head of benefits, emphasized that the company can confidently manage long-term liabilities, as only about one-third of its 108,000 workers are eligible. Participants can still save in a 401(k), albeit without an employer match.
Stefanie Duran, a 44-year-old nurse at Northwell’s Lenox Hill Hospital, plans to enroll in the pension while maintaining her 10% contribution to her 403(b), where she has already saved over $200,000. “People are living longer, and the 403(b) for many people isn’t going to be enough,” she explained. Eileen Toback, executive director of the New York Professional Nurses Union, noted that contract negotiations had stalled entirely until Northwell offered its members access to the pension.
In 2024, IBM reopened its massive cash balance pension plan, which it had frozen in 2008. Leveraging the plan’s surplus, IBM now contributes 5% of pay to current employees' pension accounts. This strategic move allowed the company to eliminate its 5% 401(k) match and 1% automatic contribution, freeing up capital for other uses, including 1% raises.
Looking Ahead
The swing toward pension surpluses has unlocked new funding possibilities, according to Jared Gross, head of institutional portfolio strategy at J.P. Morgan Asset Management. Consequently, companies are actively lobbying Congress for legislation that would allow them to use pension surpluses to cover employer 401(k) contributions without incurring excise taxes on such transfers, said Jonathan Price, national retirement practice leader at Segal.
At PECO, eligible union workers began receiving annual credits of 3% to 8% of their pay into a cash balance pension plan starting in August, with rates increasing based on age. While PECO’s parent company, Exelon, cautioned that this agreement “should not be viewed as precedent for other negotiations,” the sentiment on the ground is clear.
Larry Anastasi, president of Local 614 of the International Brotherhood of Electrical Workers, recalled canvassing members bar by bar to gauge their contract priorities. The verdict was unanimous: “Everybody wanted a pension.”