The recent announcement by the Minnesota-based conglomerate 3M to alter its pension plans for non-union U.S. employees by 2028 marks a significant moment in the ongoing evolution of corporate retirement benefits. This move by 3M, a prominent Fortune 500 company, underscores a broader trend within the corporate world.
3M's initiative directly affects pension-eligible employees, halting the accrual of benefits under the existing plans as of December 31, 2028. This transition from traditional pension schemes to alternatives, such as 401(k) plans, is indicative of a shift that has been brewing across the corporate landscape for some time.
The trend of pension freezes is not unique to 3M but is part of a larger narrative where companies are rethinking how they provide for their employees' retirement. These changes reflect the evolving dynamics of the workforce, economic pressures, and shifts in the regulatory environment. Companies are increasingly transitioning from defined benefit plans, which promise a specified pension payment upon retirement, to defined contribution plans, like 401(k)s, where the payout depends on contributions and investment performance.
Below is a list of companies who have frozen their pension or "have changed their defined benefit pension plans" since 2004, according to the Pension Rights Center:
FedEx
U.P.S.
L.L. Bean
DuPont
American International Group, Inc. (AIG)
United States Steel Corporation
Rex Healthcare
United Launch Alliance
Allegheny Technologies Incorporated
Boston Red Sox
Anaheim Angels
TriHealth
CONSOL Energy
Energen Corporation (p. 18)
Washington Post
Buck Consultants at Xerox
Kodak
Lockheed Martin
Tennessee Valley Authority (p. 36)
Boeing
Major League Baseball
Erlanger Health System
News Corp
Herman Miller, Inc.
Vernon, VT
Archdiocese of Philadelphia
Federal National Mortgage Association (Fannie Mae)
Huntington Bancshares (p. 116)
Honda Motor Co., Ltd. (p. 29)
Allstate Corp.
Northshore University Health System
Chrysler Group LLC
Unum Group (p. 15 of the PDF)
Exelis, Inc.
Arkansas Best
Dartmouth-Hitchcock
Rogers Corporation
Macy’s, Inc.
Anixter International Inc.
Genuine Parts Company
NBCUniversal/Comcast Corporation (p. 12)
Aurora Health Care
Verizon Communications Inc.
Sysco Corp. (p. 10)
Energy Future Competitive Holdings Company
General Motors
Herman Miller, Inc.
American Airlines
Bank of America Corporation (Note 19, p. 245)
American Woodmark Corporation
The McGraw-Hill Companies, Inc.
Xerox (p. 147 of the PDF)
Suntrust Banks, Inc.
R.R. Donnelley & Sons, Co. (p. 28)
Visteon Corporation (p. 15)
Crain Communications
Alaska Airlines (p. 14)
The Clorox Company (p. 52)
Catholic Diocese of Wilmington, Inc. (p. 6)
The Walt Disney Company (p. 53)
Central Maine Healthcare
Noble Hospital
General Electric (p. 12)
Associated Press
United Space Alliance
Journal Communications
Western & Southern Financial Group
Caterpillar, Inc.
Condé Nast
Tampa Bay Buccaneers
Washington Redskins
Shands Healthcare
HSBC Bank USA
Greenville Hospital System University Medical Center
Kraft Foods Inc.
National Penn Bancshares (p.113)
City of Franklin, Tennessee
Augsburg Fortress
Pitney Bowes Inc.
New York Times Company (p. 36)
Sunoco, Inc.
Qwest Communications
St. Barnabas Health Care System
FMC Technologies
Regional Medical Center
Detrex Corporation
Computer Sciences Corporation
The Washington Hospital
Dow Jones
Willis Group Holdings Ltd.
Lower Bucks Hospital
CIGNA
Boise Cascade Holdings, L.L.C.
Cooper Tire & Rubber Co.
Wells Fargo
Kimberly-Clark Corporation
Anheuser-Busch
Advance Publications
Talbots, Inc.
B&C Trucking Company
Regions Financial Corporation* (temporary, see p. 12)
E.W. Scripps Company
Sparton Corporation
Atlanta Convention and Visitors Bureau
Aon Corporation
Cincinnati Bell
McClatchy Company
Saks, Inc.
Albany International Corporation
Seattle Times
Motorola
GenCorp Inc.
Random House, Inc.
Evening Post Publishing
R.H. Donnelly Corporation
New York Times Company
Xerium Technologies, Inc.
Equifax
YRC Worldwide Inc.
Boeing
Gannett
Standard Register
Beneficial Mutual Bancorp Inc.
3M
Bryn Mawr Bank Corporation
Northrop Grumman
Neiman Marcus, Inc.
Milacron Inc. (see p. 22)
Foamex International Inc.
Haynes International, Inc.
State Street Corp.
Andersen Corp.
Delphi Corporation
Waters Corporation
Center Bancorp, Inc.
Dow Chemical Company
ArvinMeritor, Inc.
NASDAQ
Dun & Bradstreet Corp.
Fidelity Investments
Dana Corporation
Tecumseh Products Co.
Goodyear Tire & Rubber Company (p. 68)
FedEx
SureWest Communications
HP (Hewlett-Packard)
SunTrust Banks Inc.
Ryder System, Inc.
Shenandoah Telecommunications
Kershaw County Medical Center
North Pittsburgh Telephone Co.
Whirlpool Corporation
Vought Aircraft Industries, Inc.
Citigroup (p. 95)
Belo Corp.
Aon Corporation
Met-Pro Corporation
Lenox Group Inc.
MeadWestvaco Corporation
Michelin
Tredegar Corporation
Journal Register Company
LSB Corporation
Con-Way Inc.
Remington Arms Company, Inc.
The Hershey Company
NCR Corporation
Calgon Carbon Corporation
Alliant Techsystems
Flushing Financial Corporation
DuPont
Tenneco Inc.
Blount International, Inc.
Harry & David Operations Corp.
Reynolds and Reynolds Company
The Stride Rite Corporation
Nortel
G&K Services, Inc.
Bandag, Incorporated
Media General, Inc.
Lydall, Inc.
A.T. Cross Company
Unisys Corporation
Lincoln Electric Holdings, Inc.
General Motors Corp.
Wellpoint, Inc.
Coca-Cola Bottling Co. Consolidated
Stepan Company
Ferro Corporation
Harleysville Group Inc.
Lexmark International, Inc.
Russell Corporation
Alcoa
Armstrong World Industries, Inc.
IBM
Nissan NA, Inc.
Verizon Communications Inc.
Sprint Nextel Corp.
Milliken and Co.
Lockheed Martin Corp.
Sears Holdings Corp.
Hewlett-Packard Co.
Motorola, Inc.
Circuit City Stores, Inc.
NCR Corp.
Hospira, Inc.
Challenges and Considerations
Employee Concerns: Adjustments to retirement benefits can create uncertainty and anxiety among employees. It's vital for companies to communicate changes clearly and provide ample notice to allow individuals to adjust their retirement planning strategies.
Regulatory Hurdles: Shifting from pension to 401(k) plans requires careful navigation of complex legal and tax regulations to ensure compliance with laws such as the Employee Retirement Income Security Act (ERISA).
Talent Retention: The nature of a company's retirement benefits package can significantly impact its ability to attract and retain skilled employees. As pension plans become less common, organizations must find new ways to offer competitive retirement benefits.
Educating Employees: There's a growing need for companies to invest in financial literacy programs for their workforce. Educating employees on managing their retirement savings, especially in the context of a 401(k), becomes crucial in empowering them to make informed decisions about their future.
As the example of 3M illustrates, the movement towards freezing pension plans is a reflection of broader economic and demographic shifts. For Fortune 500 professionals and others in the corporate sector, this trend underscores the need to stay informed and proactive in managing retirement planning. Engaging with knowledgeable financial advisers can provide the insights and strategies necessary to adapt to these changes, ensuring that the transition to new forms of retirement benefits is managed effectively and with the best interests of employees in mind.
Disclaimer
The Retirement Group is not affiliated with nor endorsed by your company. We are an independent financial advisory group that focuses on transition planning and lump sum distribution. Neither The Retirement Group or Osaic Wealth, Inc provide tax or legal advice. Please call our office at 800-900-5867 if you have additional questions or need help in the retirement planning process.
The Retirement Group is a Registered Investment Advisor not affiliated with Osaic Wealth, Inc and may be reached at www.theretirementgroup.com.