3M is freezing pension plans for non-union U.S. workers on the finish of 2028, the corporate introduced Monday.
The fee-saving transfer applies to 3M workers and the ones on the well being care corporate it’s spinning off this 12 months.
The Maplewood-based corporate began transferring towards 401(ok) retirement plans in 2009 when it bring to an end get entry to to the U.S. 401-k for brand new hires and rehires. 3M mentioned it has fewer than 9,000 energetic individuals within the 401-k.
Via subsequent 12 months, 3M is predicted to have about 84,000 workers international, a discount of about 8,500 in comparison to 2022 ranges. The cuts are part of a broader reorganization intended to shore up company budget amid massive felony settlements and demanding situations.
“That is crucial resolution for 3M because it is helping to arrange each corporations for long run good fortune,” CEO Mike Roman mentioned in a observation. “To lend a hand the ones impacted, we’re offering 5 years of advance understand to make sure our workers can plan choice methods to fulfill their post-retirement source of revenue wishes.”
Whilst nonetheless commonplace in govt jobs, simply 15% of private-sector staff have get entry to to a pension or defined-benefit plan, in line with the Congressional Analysis Provider. Pension participation within the inner most sector peaked at 30 million in 1980 and now numbers 12 million.
3M’s transfer clear of pensions follows friends like Common Electrical, which made a equivalent announcement in 2019. It additionally closes the e-book on a advantage that have been a large draw for body of workers recruitment and retention.
Pension-eligible 3M workers will accrue advantages till Dec. 31, 2028. Former workers with vested advantages, retirees and the ones receiving pension annuity bills don’t seem to be impacted by way of the freeze, 3M mentioned.
Corporate officers didn’t say what quantity of money the transfer to defined-contribution retirement plans would save however as a substitute fascinated about how 401(ok) plans give workers “extra flexibility and keep watch over relating to making an investment of their long run.”
3M projected a long-term pension advantage legal responsibility of $13.5 billion as of ultimate 12 months, which used to be just about totally funded. The corporate’s annual pension prices had been declining in recent times; the 2023 pension expense used to be $145 million. 3M had greater than $34 billion in income in 2022.
As 3M has pledged billions to settle litigation over PFAS and earplugs — and can quickly shed 1 / 4 of its income in a by-product — some traders worry a dividend reduce might be at the horizon.
