Hershey, the US’s largest confectioner, yesterday (10 October) unveiled plans to close its traditional pension plan to un-unionised new recruits and reduce its future pension benefit for thousands of current employees in a bid to cut costs.
For employees participating in Hershey’s defined-benefit pension plan, future benefits will accrue at a reduced rate, but the company will offer them a higher match on their 401(k) contributions.
Employees hired on or after the beginning of January 2007 will not be able to take part in the defined-benefit pension plan. These new employees will receive the increased 401(k) match, plus a 3% contribution to their 401(k) account, regardless of whether they contribute, Hershey said.
The current 401(k) contribution will increase from the current benefit, an aggregate 60% match of contributions up to 5% of an employee’s salary, to a 75% match on up to 6% of an employee’s salary.
The company did not reveal how much it anticipates saving or what impact the changes are likely to have on the value of employee retirement benefits.
Previously earned pension benefits are protected from the changes, which will not affect current retirees and terminated employees with a deferred pension benefit, the chocolate maker said.