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DAYTON, Ohio--Information technology giant NCR Corp. is phasing out its defined benefit pension plan, completing a process it started two years ago when it closed the $3 billion plan to new and younger employees.
After Dec. 31, plan participants no longer will earn benefits in the plan, but instead will be eligible for an enhanced 401(k) plan match.
NCR, a 122-year-old company with 2005 revenues of $6 billion, said in a Securities and Exchange Commission filing last week that the phase-out will reduce its previously expected net retirement expense by about $40 million next year.
NCR's action is the second step it has taken since 2004 to wind down the plan. In September 2004, NCR, a company whose name once was synonymous with cash registers, closed off its pension plan to new and younger employees and offered those individuals a beefed-up 401(k) plan.
Employees age 40 and older were given a choice of continuing to earn benefits in the pension plan or ceasing benefit accruals and instead becoming eligible for the enhanced 401(k) plan match. Under the latest change, after Dec. 31, those older employees who remained in the pension plan will be shifted to the enriched 401(k) plan already offered to other employees.
Under the enriched 401(k) plan, NCR matches 100% of employees' contributions on the first 4% of pay and 50% of contributions on the next 2%. Currently, for employees still earning benefits in the pension plan, NCR matches, in the 401(k) plan, 75% of contributions on the first 3% of pay and 50% of employees' contributions on the next 3%.
Other large employers, including Sears Holdings Corp. and IBM Corp., in recent years have taken a two-step approach in phasing out pension plans.