Boeing is to move 68,000 US-based employees into a new defined contribution (DC) component of its defined benefit (DB) pension from January 2016.
The US aerospace organisation has reached a deal with unions to move its non-unionised employees in its 401(k) plan into an employer-funded DC pension.
All benefits earned in the DB pension prior to the transition will be paid to employees in retirement, and the organisation will continue to match employee savings in the new pension scheme.
The organisation is making the changes to address the challenges created by its DB scheme.
The changes includes:
- A three-year transition benefit to employees’ 401(k) plan, equal to 9% of eligible income in 2016, 8% of income in 2017 and 7% in 2018.
- Pay-period contributions to 401(k) of 3% to 5% of eligible income, depending on age, beginning in 2019.
- Access to free retirement counselling services for up to two years.
- Access to seminars and online retirement planning tools.
Tony Paraside, senior vice president of HR and administration at Boeing, said: “Our objective in making this transition is twofold: to continue providing an attractive retirement benefit contributing to employees’ retirement security, while also assuring our competitiveness by curbing the unsustainable growth of our long-term pension liability.”