US - Industrial firm Blount International is set to freeze its defined benefit pension plan effective January 1, 2007 in a bid to save the company up to $23m in the next five years.
As of next year, employees currently participating in the plan would cease accruing benefits, while all retirement benefits earned up to that time would be fully preserved, said James Osterman, chairman and CEO.
The firm would also begin making additional contributions to its 401(k) plan for service periods after December 31, 2006, and it intends to make annual contributions to employee accounts of between 3% and 5% of their annual wages.
The amount contributed would be based on an employee's years of service, said Osterman.
The new design of the retirement programs meets our company's objective of continuing to provide employees with a competitive retirement benefit while lowering the company's annual expense.
It is estimated the changes would cut retirement plan expenses by between $16m and $23m over the next 5 years.
In conjunction with the plan changes, the company is set to record a one time $3.7m expense in this year's third quarter.
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