Blogging Employee Benefits

February 21, 2006

Pension Ice Age Steals Stepan

Filed under: Pensions — Fuguerre @ 5:01 pm

Current accounting rules, government regulatory requirements, and fluctuation in the value of assets held by the pension plan result in volatility in defined benefit plan expense and funding requirements. These issues do not apply to defined contribution plans as they are funded annually.

Stepan Company has announced that it will freeze its salaried workers’ defined benefit plan effective June 30, 2006. A replacement defined contribution plan will provide employer contributions of 4 percent of base salary. Certain employees with long service will be eligible for a supplemental employer contribution during a transition period of up to 5 years, designed toward replacing a portion of the benefit that would have accrued during those years under the pension plan. Although the current changes will not affect hourly workers, Stepan intends to seek similar changes for those workers when collective bargaining agreements are renegotiated. [Form 8-K; PRNewswire]

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