Chrysler De-Risks with DB Plan Freeze

Chrysler will follow other major US automakers and freeze its DB plan.

(June 17, 2013) — Chrysler will freeze its defined benefit pension plan for US employees, effective December 31, 2013.

The move does not mean the automaker is headed for a major buyout in the vein of General Motors: Chrysler’s CEO said there was “no need” for such an action, according to Reuters.

Chrysler employees will retain all their pension benefits that were accrued before 2013. Approximately 8,000 employees will be affected by the pension plan restructure.

The company will transition those employees into a defined contribution plan and the automaker has offered a 401(k) retirement type plan to all salaried employees hired on or after January 1, 2004.

Chrysler will offer personalized financial counseling for six months to those affected by the pension plan restructuring.

“Nearly ten years ago, to help mitigate unpredictable financial costs and consistent with industry trends, Chrysler closed the pension plans to new participants and created the employee managed retirement plan, a defined contribution plan, for salaried employees hired on or after January 1, 2004,” said Nancy Rae, Chryslers’ senior vice president for human resources. “We recognize the importance employees place on retirement benefits.”

The move comes on the heels of competitor General Motors’ aggressive de-risking last year. GM froze its DB pensions for 26,000 salaried workers in the US and transitioned them to 401(k) plans, while transferring liabilities to insurer Prudential. 

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