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Aerospace giant Lockheed Martin Corp. will completely freeze its defined benefit pension plan for salaried employees, completing a process it began in 2006.
In the first step of a two-part plan, the amount of employees’ pay, used for pension benefit calculation purposes, will be frozen as of Jan. 1, 2016.
Under the second step, employees’ credited service for pension benefit calculation purposes will be frozen as of Jan. 1, 2020.
Affected employees, will, by 2020, receive an automatic company contribution equal to 6% of pay to a defined contribution plan. They also will be eligible for company matching contributions, up to 4% of pay.
Lockheed’s actions follow an earlier step — effective in 2006 — in which new salaried employees no longer could participate in the defined benefit plan.
Among other things, Bethesda, Maryland-based Lockheed said in a statement that it was taking the action to better manage retirement plan costs at a more predictable rate and to limit long-term liabilities.
Another factor, Lockheed said, was changing workforce demographics. “Since we closed the pension plan to new participants in 2006, we expect that by 2016, the majority of our employees will not be pension participants. Introducing a unified retirement program ensures that we’re offering consistent and competitive retirement benefits to the majority of Lockheed Martin salaried employees,” the company said
About 48,000 of Lockheed Martin’s 113,000 employees participate in the pension plan.