defined benefit pension
I will never claim to be an expert but I do read magazines like Money, Kiplingers, and Smart money when I'm waiting for a Dr or Dentists appointment and what I've picked up is to be self sufficient and not plan on somebody else to take care of you. I've seen a number of articles where other companies have done away with a defined benefit pension plan and changed it to a different plan where they don't have a monthly payment obligation. the company still offers a retirement plan but the employee is more involved. Airlines and auto companies are in a world of hurt but DuPont is a company that isn't in an industry that is hurting to the extent that airlines or auto companies and they recently announced they are no longer going to have a defined benefit pension plan.
Monday, September 04, 2006
WILMINGTON, Del. -- The DuPont Co. announced last week that it will change its primary U.S. defined benefit pension plan and enhance its savings plan, effective January 2008.
"These steps are consistent with market trends in employee benefits and will enhance the company's business competitiveness," said James C. Borel, senior vice president, DuPont Human Resources.
"The planned changes reinforce our commitment to help employees provide for a secure retirement. They also modernize the design of our savings and retirement plans for a new generation of employees, many of whom want more direct control and portability in their benefit."
The changes reflect DuPont's strategy of shifting retirement benefits toward the defined contribution and savings plans and away from the defined benefit pension plan.
Key elements of the plan include:
The defined benefit pension program for current employees will continue, with future accruals at a reduced level. For service accrued through 2007, the pension calculation will not change. For service accrued after 2007, the pension calculation will be reduced to one-third of its current level. Both segments of the benefit will continue to grow with pay until retirement.
Beginning January 2008, a significantly enhanced savings and investment plan will include 100 percent employee participation in the plan via a company contribution of three percent of each employee's pay into his/her account.
Employees who contribute to the savings plan also will receive a 100 percent company match on the first six percent of their savings. This doubles the current company match, which is 50 percent up to six percent and enhances the company's ability to compete for talent.
The company-paid survivor benefit, provided through the pension plan, will not continue to grow with service or pay after Dec. 31, 2007. The benefit employees will have earned up to that date will be fully preserved.
Effective Jan. 1, 2007, new hires will participate in the enhanced savings plan. They will not be eligible to participate in the Pension and Retirement Plan and will not receive a Company subsidy for retiree healthcare or retiree life insurance.
The changes do not affect DuPont's current U.S. retirees, former employees with vested benefits or current employees who retire or terminate prior to Jan. 1, 2008.
The plan amendments will have little effect on the company's 2006 earnings. However, the company does expect to record a modest benefit to earnings over the balance of the year from a required third quarter re-measurement of its U.S. pension cost, to reflect the current market value of assets and interest rates.
As for the question of what we are guaranteed my understanding is that anyone vested is guaranteed what they have to this point. As for the Feds the last thing you want to see is the Fed involved because when Delphi was close to shutting their doors (not that they won't shut them still) the talk was that people would get somewhere in the neighborhood of 40% of what they had coming.
Anyhow enough about this because I got better things to do like drink beer and watch football
