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Member, Beacon International Group, Ltd.
ST. PAUL, Minn.3M Co. is phasing out its pension plan in favor of an enriched 401(k) plan as the exodus of major employers from the defined benefit plan system continues.
Employees hired on or after Jan. 1, 2009, will be covered by a new 401(k) plan, to which 3M will make an automatic contribution equal to 3% of employee pay. It also will fully match employees' salary deferrals, up to 6% of pay.
The diversified products manufacturer, though, is retaining pension plan coverage for current employees and is raising its 401(k) plan match. 3M now matches 35% to 50% of deferrals, up to the first 6% of pay.
The new plans "will help us attract and retain talent and address the needs of today's changing workforce, which desires more portability and greater involvement in decisions affecting their financial futures," Jan Angell, 3M's vp-compensation and benefits, said in a statement.
At the end of 2007, 3M's pension plan was overfunded, with $11.1 billion in assets and $10.2 billion in obligations. St. Paul, Minn.-based 3M reported $4.1 billion in net income in 2007 on $24.5 billion in sales.
Other corporate giants that in recent years have announced phase-outs of their defined benefit plans include Hewlett-Packard Co., IBM Corp., Lockheed-Martin Corp. and Verizon Communications Inc.