United States Steel Corp. announced this weekend that it will be freezing its defined benefit pension plan at the end of 2015, according to the Wall Street Journal.
People won’t lose benefits already accumulated; but starting in January 2016, all worker contributions will go towards a 401(k) plan.
More from the Wall Street Journal:
The company announced in a regulatory filing that employees in the plans will stop receiving benefits under the plans, which guaranteed payouts to retirees, and will be moved to a defined contribution 401(k) plan. Under those plans, retirees are responsible for their own investment decisions.
U.S. Steel’s pension had a pension obligation of $7.4 billion at the end of last year, down from $10.3 billion at the end of 2013. The plan was underfunded by $966 million, meaning the value of the assets in the plans was lower than the obligation.
“We continue to face increasingly significant headwinds and pressures,” said a U.S. Steel spokeswoman via e-mail, adding, “it requires us to examine all aspects of our company.”
[…]
In 1979, 38% of U.S. private-sector workers were covered by defined-benefit plans. By 2011, that figure fell to 14%, according to the Employment Benefit Research Institute. By contrast, the percentage enrolled in defined-contribution plans more than doubled to 42%.
The company was the 15th largest steel producer in the world in 2014.
Photo by Sarath Kuchi via Flickr CC License
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