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Fri June 14, 2013
Chrysler to change pension system for 8,000 salaried workers
Chrysler is freezing contributions to its U.S. defined benefit pension plans for salaried employees, and will switch to a defined contribution plan instead.
Chrysler will determine the amount it will contribute - and that amount is not being publicly disclosed - and employees will choose from a number of investment strategies, such as stocks and bonds, annuities, etc.
The Detroit automaker also has a 401(k) retirement savings plan for salaried workers. That plan will not change. Workers can choose to put some of their own earnings into that plan. Chrysler does not match the contribution.
The automaker says employees will not lose any of the money that has been set aside for them in the older defined benefit plans. The changes do not affect already retired employees.
The move is part of a trend, not just in the automotive industry, to limit the corporate risks involved in guaranteeing monthly pensions for employees. Defined contribution plans shift the risk to the employee.
The high costs of defined benefit pension plans are also a huge concern for many cities and school systems.