Blogging Employee Benefits

January 17, 2006

Pension Ice Age Deepens

Filed under: Pensions — Fuguerre @ 2:54 am

“We have very competitive benefit plans at Alcoa, and we periodically evaluate the level of competitiveness to ensure our plans are in line with the marketplace.”

Alcoa is closing its defined benefit pension plan for most new U.S. salaried employees, effective March 1, 2006. In addition to Alcoa’s matching contribution to its 401(k) plan of up to 6% of salary, Alcoa will add a contribution of 3% for new hires. [Press Release (1/16/05)]

Current salaried employees will continue to accrue future benefits under the pension plan. Benefits of collectively bargained employees also remain unaffected by the change.

While the closure of the salaried pension plan limits long-term employer liability, the company anticipates no immediate impact on the company’s net income. Since the change affects only future employees, the company will not be forced to recognize a curtailment loss, as has been required for companies that have frozen their pension plans for current employees.

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