While almost of half of North American companies remain committed to their defined benefit plans, they are still making significant changes to the way plans are managed, according to a recent survey.

The poll, sponsored by SEI, points to an emerging divide in the defined benefit space as organizations weigh their commitment to pensions amid ongoing market and regulatory changes.

A total of 302 executives –163 from Canadian companies and 139 from U.S. companies — responsible for managing defined benefit plans ranging from $40 million to over $3.5 billion in assets responded to a series of questions from on the future of defined benefit plans

Major challenges in maintaining pension plans are fueling the ongoing trend of outsourcing of plan management with 81% of all executives polled saying their organizations will consider this route, the survey noted.

Of those executives who have closed or frozen plans, 65% revealed that they already outsource at least one plan management function.

The consideration of plan management changes coincides with design changes as almost a third (29%) of plans that are currently active say they will either close, freeze or terminate their pensions by the end of 2007. If that were to occur, 52% of all U.S. and Canadian plans polled will be closed, frozen or terminated by the end of 2007. The trend towards closing and freezing plans is slightly less prevalent in Canada (30%) than the U.S. (40%).

Within a changing pension environment, 68% of Canadian and U.S. respondents said that they are considering plan design changes for the purpose of eliminating or reducing costs.

And the alternative of choice for those looking to replace their defined benefit plan is towards a defined contribution or Capital Accumulation Plan, with nearly half of respondents (43%) choosing or considering those over alternative plans.

“While many companies in Canada and the U.S. want to continue offering defined benefit plans to employees, they are facing many obstacles,” said Andy Kitchen, managing director, strategies and solutions in Canada. “In light of a challenging regulatory environment, rising costs and investment volatility, pension plan sponsors are evaluating the impact that both internal plan management and plan design have on their overall business, and how they can modify these elements to benefit all.”

Sixty-one per cent of Canadian executives polled who currently manage closed or frozen plans already outsource investment management and/or administration.

Decisions being made by parent companies are impacting Canadian plan sponsors as almost one fifth (18%) said that is a reason their organization is considering or did make a change to its defined benefit plan.

Although 68% of those Canadian executives polled currently manage active plans, almost a third (28%) of those executives anticipates making changes with most of that group (78%) expecting those changes to occur by the end of 2007.

Almost a quarter (22%) of those Canadian plans polled that are already closed anticipate freezing accruals by the end of 2007.