US - Fidelity Investments is closing its traditional pension plan to ‘address the evolving and changing needs its employees will face in retirement'.
The company has taken the decision to cut off the scheme after an internal survey showed that over 70% of employees did not know how they would pay for healthcare in their retirement. The company will now offer a 401(k) plan with a new health savings credit for its employees.
Under the Retiree Health Reimbursement plan, the company will contribute $3,000 annually to each full-time employee's account.
A Fidelity spokeswoman said there would be "immediate vesting of the current pensions plan for all active employees, including a lump sum payout of all accrued pensions benefits earned, which can be either received in the form of an annual annuity payment or rolled over into employee’s profit sharing plan".
She added: “While the profit sharing plan has been the cornerstone of our retirement savings plan historically, we know that many other companies will continue to offer pension plans. We believe defined benefit (DB) plans are outstanding retirement vehicles for many. The plan we are going forward with is to address a gap in our existing retirement savings plan for our employees.”
A buyout tool which provides schemes with up-to-date pricing and comparisons between insurers has been launched by JLT Employee Benefits.
The DB white paper sets out plans to review the funding regime, with 'prudent' and 'appropriate' possibly redefined. But James Phillips asks if this could this signal a return to an MFR-like approach?
The trustees of GKN's pension schemes have agreed a package of mitigation measures that would improve funding to a "more prudent level" if Melrose's offer is accepted by shareholders next week.
While the new powers are welcome, most respondents doubt it will make a difference to the outcomes for members, Pensions Buzz respondents say.