Effective April 1, specialty metal engineering and manufacturing firm Arconic Inc. ($20 billion) will freeze its US defined benefit (DB) pension plans, the company announced Monday.
Approximately 7,900 US workers will be affected by the freeze, although they will be able to collect benefits earned through March 31. The freeze will not impact those who have already vested or are collecting benefits.
Arconic is expecting to see a $140 million liability decrease linked to the reduction of future benefits, as well as a $5 million pre-tax curtailment charge in Q1 2018. For the full year, the company projects to shrink its pension-related expense by roughly $50 million pre-tax.
For the affected employees, Arconic will provide a 3% contribution of their compensation to its 401(k) plan, as well as match up to 6% of their contributions to the applicable plan, which is typical for new salaried employees. Arconic will also provide affected employees a 3% transition contribution for the rest of 2018.