Goodyear makes changes to salaried employee, retiree pensions
Goodyear Tire & Rubber Co. has announced changes to its United States-based retail and salaried employee and retiree pension plans. Changes will be phased in over a two-year period and are expected to significantly reduce Goodyear's pension and retiree obligations.
The Akron, Ohio-based tiremaker expects after-tax savings of $80 million to $90 million in 2007, $100 million to $110 million in 2008, and $80 million to $90 million in 2009 and beyond.
Benefit plans changes, effective Jan. 1 2008, include:
* increasing the amounts that current and future salaried retirees contribute to the cost of their medical benefits;
* redesigning retiree medical plans to minimize cost impact on premiums;
* closing Goodyear's Medicare supplement plan to new entrants;
* discontinuing company-paid life insurance for salaried workers.
Pension changes include:
* freezing current salaried defined pension benefit plans as of Dec. 31, 2008;
* replacing defined benefit pension plans with enhanced 401(k) savings accounts starting Jan. 1, 2009:
* introducing company-matching contributions for the salaried 401(k) plan at 50% for the first 4% of annual pay, starting Jan. 1, 2009.
"The changes we've made were only made after careful consideration of alternatives," says Kathleen Grier, Goodyear's senior vice president of human resources.
The alterations "are consistent with our goal of reducing costs in excess of $1 billion by the end of 2008."