2025 CFO Survey Results: Journey Planning and Plan Design 

In part one of our three-part series covering our 2025 Mercer/Argyle CFO Survey¹ results, we take a closer look at how organizations are refining their plan design and exploring innovative models to help meet evolving workforce and financial goals. The survey included responses from 173 senior financial executives who manage an organization’s defined benefit plan. Survey responses capture a broad cross-section of US industries and plan sizes, from those with less than $100m in assets (5% of the total respondents), to plans of between $100m to $1bn (34% of the total), to large and mega plans in excess of $1bn in assets (61% of the total). Below summarizes the survey’s three key takeaways.

Part 1

Journey planning and plan design: Funding improves, and the roadmap changes – How organizations are refining plan direction and exploring new models.

Part 2

Mitigation of strategic risk: Pension risk transfers forge ahead amid new litigation – How tools like glide paths, annuities, and lump sums are used to control volatility.

Part 3

Pension oversight, investments, and governance: Managing investment risk and governance risk is top of mind – How governance structures and fiduciary practices are being redefined.

DB plan sponsors have always faced a complex set of decisions. In 2025, that complexity persists, but organizations are now tackling it with greater intentionality and a more structured approach. Half of the 2025 Mercer/Argyle CFO Survey respondents reported that they have no intention of terminating their DB plans in the near future. While plan termination remains a common consideration, there has been a shift from previous trends, where the termination of a DB plan was the intended endgame for two-thirds to three-quarters of all sponsors.

This shift indicates that, after multiple years of all-time-high plan exits, the entities that remain are more likely to be committed to their DB plan for the long term. This strategic recommitment is not just about maintaining the status quo; it involves re-evaluating funding commitments, reassessing workforce requirements, and integrating retirement benefits with broader organizational objectives. Now, retaining a DB plan must be justified, with the rationale clearly communicated to both staff and external stakeholders, in order to instill a sense of reassurance in the decisions being made.

One factor that weighs heavily on plan sponsors deciding to terminate is the cost of the PBGC premiums. These premiums, which escalate as underfunding worsens, have led 80% of firms to either increase their contributions or indicate an intention to do so. These PBGC costs essentially act as a “tax” on DB plans and materially impact decisions on both funding policy and risk transfer. 

In our interview with Sandra D. Pham, Vice President of Finance, People & Culture at Kaiser Permanente, she reflected on her experience with plan review efforts: “The costs are heavy; but the trust we build outweighs them.” Her comments underscore how some employers see DB plans not only as a tool for financial predictability, but also as a reflection of company values and long-term investment in workforce stability.

Pension risk is just one of many risks handled by financial executives. In fact, pension strategy has contributed to the development of a wider enterprise risk framework for almost half of all CFOs. This represents a departure from the old, siloed way of thinking and a shift toward a more holistic view of how pension liabilities relate to other business risks, such as capital planning, labor risk, and sensitivity to interest rates. In practice, this often translates into a proactive approach of re-evaluating plan design and investment strategy in the context of workforce trends and talent retention strategies, instilling confidence in their leadership.

"Hybrid [DB plans] offer a delicate balance," noted Marco Rossi, Head of Finance at Siemens Healthineers. “They safeguard benefits while guarding against market storms.” His experience demonstrates that hybrid plan designs are not merely compromised solutions; they can be strategic frameworks tailored to evolving workforce expectations and financial objectives.

The poll also signals a shift at the structural level. Just over half of participants (50.3%), for example, said they are actively contemplating changes to their plan design. These changes differ widely, with some common initiatives including:

• Amending accrual formulas to limit year-over-year volatility.
• Reviewing closed or frozen plans to determine whether reopening for all or a segment of the company’s workforce is feasible, and if so, reopening under modified terms.

Hybrid plan models are becoming the most popular redesign course; 37% of companies have already adopted a hybrid option, such as a cash balance or variable annuity plan, and another 47% are in the process of actively discussing hybrid models. Hybrid designs are attractive to employers seeking to strike a balance between predictability and flexibility, as well as employees who desire greater security, transparency and control over their retirement futures.

Across all industries, leaders spoke of the importance of plan designs that appeal to a multigenerational workforce. In fields like manufacturing, some older workers cherish the certainty of DB plans, while other sectors and demographics prefer defined contribution plans that can move with the employee and be invested as the employee sees fit.

Hybrid models allow the employer to match employee preferences and share risk. In industries with high mobility where retention is crucial – such as pharma and biotech – hybrid models can offer a competitive approach in the talent market.

A consistent concern raised during the interviews with CFOs was the need for transparency and predictability. Several CFOs explained that reputational exposure is increased when plan changes are seen as arbitrary or poorly communicated. Conversely, organizations that adopt well-considered communication strategies, grounded in principles of equality and informed by data, tend to achieve the highest levels of employee acceptance, even when they may need to reduce benefits or modify plan designs.

When their employer switched to a hybrid plan, one executive in the industrial sector reported that the change was accompanied by a year-long educational campaign that included side-by-side comparisons, interactive tools, and access to one-on-one financial counseling. Participants not only reported greater satisfaction with their plans but also engaged with additional financial programs provided by the company at an increased rate.

Beyond participant concerns, some CFOs indicated that boards and audit committees are becoming more involved in supervising plan design strategy. The retirement strategy is now a sit-through topic on some organizations' quarterly risk or finance committee meeting agendas. This increased focus reflects a growing awareness among sponsors that the direction of the DB plan has consequences for organizational balance sheets, labor relationships, and the company's brand.

The insights from Part One of the 2025 Mercer/Argyle CFO Survey reveal that DB plan design is no longer driven by legacy assumptions but by strategic intent. Rather than defaulting to termination, many organizations are choosing to refine and modernize their plans to align with broader business goals and workforce needs.

Hybrid models and market-based benefit formulas reflect an emerging mindset: that DB plans can be both financially responsible and employee-centric. With rising PBGC premiums and increased scrutiny from boards and audit committees, plan sponsors are rethinking their obligations in a more integrated, transparent, and future-focused manner.

Ultimately, this shift can signal a move away from managing pensions as isolated financial instruments. Instead, plan sponsors are embedding retirement strategy into enterprise planning, workforce retention, and organizational culture, creating DB plans that are as adaptive as the employees they serve.