Chemical manufacturer DuPont Co. said Monday that it is redesigning its benefits plan to increase employee participation in its 401(k) plan while decreasing dependence on its traditional pension plan.
As part of the changes, employees hired on or after Jan. 1, 2007, will not be eligible to participate in DuPont's pension plan and will not receive a company subsidy for retiree healthcare or retiree life insurance.
The defined pension program for current employees will continue, but the pension calculation will be reduced to one-third of its current level for service accrued after 2007, DuPont said.
The company said that, beginning Jan. 1, 2008, it will match 100 percent of the first 6 percent of employee contributions to the 401(k) plan, doubling the current 50 percent match. In addition, DuPont will ensure 100 percent employee participation in the 401(k) plan by contributing 3 percent of each employee's pay into his or her account.
The company-paid survivor benefit, provided through the pension plan, will not continue to grow with service or pay after Dec. 31, 2007. Survivor benefits earned up to that date will be preserved.
DuPont estimates that the changes will improve earnings by about 3 cents per share in 2007 and 5 cents per share beginning in 2008.
DuPont shares rose 22 cents to close at $39.47 Monday on the New York Stock Exchange.
DuPont said the changes do not affect current U.S. retirees, former employees with vested benefits, or employees who retire or terminate prior to Jan. 1, 2008.
James Borel, DuPont senior vice president for human resources, said the changes are aligned with market trends and will help the company remain competitive.
"Overall, it's an innovative package," he said. "It's going to deliver value to employees and give them increased control over their retirements assets... The driver was attracting and retaining good talent, but we challenged ourselves to do it in a way that was good for the company."
Mary Dineen, global benefits strategy manager for DuPont, said young people entering the workforce, as well as mid-career workers, are looking for portability in retirement assets.
"We clearly heard from employees that they really want this portability and control," she said. "When we look at industry trends, we see more and more companies moving to a savings plan approach."