Vishay Intertechnology Inc. is offering about 2,200 former employees who are eligible for but not yet receiving monthly pension benefits the opportunity to convert their future annuity to a lump-sum benefit.
Vishay, a Malvern, Pennsylvania-based manufacturer of semiconductors and other electronic components, said in a statement last week that it is making the offer “to provide greater flexibility for eligible participants to manage their retirement savings and also assist the company's overall management of its pension obligations.”
The company said affected participants will have from July 1 to Sept. 1 to make a decision. In 2009, the plan, which at the end of last year was slightly overfunded with $295.6 million in assets and $279.9 million in liabilities, was frozen, with current participants not accruing benefits after Dec. 31, 2008.
When pension-plan participants take lump-sum benefits and are no longer covered by the plan, their former employers do not have to worry about how interest rate fluctuations and investment results could affect how much they will have to contribute to their pension plans to fund future annuity payments.
In addition, when participants take lump sums and move out of a pension plan, employers can reduce certain fixed costs, such as the payment of sharply rising premiums to the Pension Benefit Guaranty Corp.