Another company is dumping another one of its pension plans. Boeing Co. (BA) is normally in the news for announcements about its 787 Dreamliner plane or other plane orders. On Thursday, the news is that Boeing announced future retirement plan changes for its non-union employees. The company claims that this is delivering market-leading retirement benefits while strengthening competitiveness, but some 68,000 workers are now scheduled to move from a defined benefit plan to a defined contribution plan.
Boeing is telling nonunion employees who are participating in its defined benefit pension plans that in 2016 they will transition to a company-funded defined contribution retirement savings plan.
While this will not impact the operating earnings that analysts use, there will be a non-cash pension curtailment charge of approximately $110 million that will be recorded in the first quarter for 2014 GAAP earnings - and that is in addition to previously announced $140 million and $80 million non-cash charges tied to prior retirement plan changes as well.
Boeing said that in 2016 it will make cash contributions each pay period through a new defined contribution component of the 401K plan. The transition also includes managers and executives, and the company was also quick to say that retirees already receiving pension benefits are not affected by this change.
The plan includes a three-year transition benefit to employees' 401(k) accounts equal to 9% of their eligible income in 2016, 8% of income in 2017 and 7% of income in 2018.
All nonunion employees hired since 2009 and new hires of 28 unions have already been moved to defined contribution plans. Similar changes were also included in contract extensions ratified this year by members of the company's biggest union.
Boeing said, "All pension benefits earned through the end of 2015 are the employees' to keep. The credit-based portion of employees' defined benefit pension will grow with interest credits until employees begin receiving their pension benefit."
Boeing shares were up only 0.2% at $129.10 in late-Thursday trading. The company's 52-week range is $79.37 to $144.57 and the consensus price target is up above $152.
- Worst Product Flops of All Time
- America's Most (and Least) Literate Cities
- A Scent of Bacon iPhone Alarm
- Employment & Career