SEATTLE, March 7 (UPI) -- On Thursday, Boeing announced the freezing of traditional defined-benefit pensions for all non-unionized employees, including management and executives, to be replaced by a 401(k)-style defined-contribution retirement-savings plan come 2016.
Boeing called the change an effort to edge “unsustainable growth” of their long-term pension liability.
The switch is part of a deal the company made with unionized workers in Seattle this January. The workers voted to accept the change in exchange for Boeing agreeing to assemble its 777X jets in Washington State.
In the past, pensions have been a powerful means of enticing and retaining employees. But paying out pensions saddles companies with financial burdens -- often for decades. In the current economy, large U.S. companies have been seeking to reduce their obligations to retired employees, either by freezing current plans so employees cease building benefits, or shutting out new hires from existing plans.
In 2012, GM announced a planned $26 billion reduction. Last December, Macy’s Inc. froze its pension plan and increased contributions to employees’ 401(k)s, which leave workers responsible for investment risk and allow employers the option to reduce their contributions.
In January, Boeing Chief Executive Jim McNerney said, “Dealing with [pension plans] in a fair and equitable way is something that we’re mindful of, but stay tuned.”
McNerney’s own pension plan will pay out more than $3.6 million a year and is set to freeze in 2016 as well, but McNerney, who turns 65 this August, may well retire before that happens.
[Seattle Times] [Wall Street Journal] [BBC]