Dow revamps several other retirement savings plans

MIDLAND, Mich.—Aside from offering a cash balance pension plan to new employees, Dow Chemical Co. is making several other changes to its retirement plans, effective Jan. 1, 2008. The changes include:

• Automatic enrollment. New employees that don't indicate whether they want to enroll in Dow's 401(k) plan will be automatically enrolled and will defer 3% of base pay to the plan with deferrals automatically increasing by one percentage point a year until reaching 6%, unless employees opt out.

• 401(k) plan matching contributions. Dow will match 100% of employees' deferrals, up to the first 2% of pay, and 50% of deferrals on the next 4% of pay. Currently, Dow makes an automatic contribution equal to 1% of pay and matches 50% of deferrals, up to the first 6% of pay.

• Roth 401(k) plan. Employees will be able to make Roth 401(k) plan contributions. Under this feature, contributions are made on an aftertax basis, but, so long as certain conditions are met, investment income earned can be withdrawn tax-free.

• Defined benefit plan vesting. Employees will be fully vested after three years of service, down from the current five-year requirement.

• Retiree health care coverage. Dow will eliminate retiree health coverage for employees hired on or after Jan. 1, 2008. However, it will continue a program, started in 1993, in which Dow matches contributions employees make to build up funds to pay for future retiree health premiums.

Under this program, Dow employees can contribute, on an aftertax basis, as little as $10 a month or as much as $160 a month to a voluntary employee beneficiary association.

When employees terminate employment, they can withdraw funds to pay retiree health insurance premiums. Dow fully matches what the retiree withdraws so long as the retiree is at least age 50 and has completed at least 10 years of service.