Bank of America to freeze DB plansReprints
CHARLOTTE, N.C.—Bank of America Corp. will freeze its defined benefit pension plans effective June 30, a spokesman said.
All eligible U.S. employees will move to a single 401(k) plan while retaining all the pension plan benefits earned up to June 30, the spokesman said.
The company also announced that it will contribute an amount equal to an additional 2% to 3% of employees' salaries to the bank's 401(k) plan in addition to the existing matching contribution of up to 5% of pay.
As of Sept. 30, Bank of America had defined benefit assets of $14.3 billion and defined contribution assets of $18.5 billion, according to data submitted to Pensions & Investments.
Back in 1985, Bank of America blazed a new trail when it converted its existing final average pay plan to a cash balance plan, becoming the first employer to do so. Hundreds of employers over the next decade or so followed the path Bank of America blazed and set up their own cash balance plans.
But over the last few years, some of those cash balance plans, like traditional pension plans, have been frozen. For example, Bank of America competitor Wells Fargo & Co. froze its cash balance plan in 2009.
Rob Kozlowski is a reporter for Pensions & Investments, a sister publication of Business Insurance.
Business Insurance Editor-at Large Jerry Geisel contributed to this story.