US - The multinational aluminium company Alcoa has announced it intention to scrap its existing defined benefit scheme for new US recruits, replacing it with a 401(k) defined contribution scheme.
Effective from 1 March, 2006, Alcoa will contribute at least 3% of an employee’s annual salary into the 401(k) and will match contributions of up to 6%.
The company, with a total of 131,00 employees in 43 countries, admitted the elimination of the DB plan “will limit long-term liability for the company” but said there would be no immediate impact on its profitability.
“We will continue to monitor the market place and make appropriate modifications to our benefits programs that maintain our competitiveness,” said Paul Thomas, executive VP of Alcoa.
According to Alcoa, a recent review of the pensions marketplace had indicated that 65% of employers now use a 401(k) as their primary pensions vehicle.
The company were keen to point out the pension change would not affect existing or retired employees.
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