SWITZERLAND - Zurich Insurance Company (Zurich) has scrapped its defined benefit pension arrangements for employees and switched to defined contribution.
The company said the Boards of Trustees of the pension funds had adopted the new arrangements to “reflect the changed economic and demographic environment”.
The new plans will take effect on January 1, 2006.
Under the plans, Zurich employees in Switzerland will be moved to autonomous pension plans based on a defined contribution approach, the company said in a statement.
The current plans are based on group insurance contracts with Zurich Life and are defined benefit plans.
Zurich will transfer the 6000 employees affected to the new arrangements and said future benefits at normal retirement for the active participants aimed to be similar to those under the present arrangements.
Following a three year transition period, the current additional benefits provided on early retirement will be phased out over a nine-year period.
The initial funding ratio of the plans, after additional financing on a statutory basis, is estimated to be about 110%. T
Zurich said the transition to the new DC arrangements would have “no adverse impact” on the group’s IFRS net income.
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