The Boeing Co. today announced a change in retirement benefits for some 68,000 non-union employees who presently have a traditional defined-benefit pension plan. In 2016, those employees will transition to a company-funded defined contribution retirement savings plan — a 401(k).
If this sounds familiar, it’s because members of the International Association of Machinists and Aerospace Workers (IAM) in January agreed to make a similar change under a new contract that guaranteed that the 777X would be built in Everett.
The change will affect non-union Boeing workers companywide and in subsidiaries, including managers, but it will not affect people who have already retired, the company said in a news release.
“Notice of the impending change is the latest in a series of steps the company has taken to address the challenges created by defined benefit pension plans,” Boeing said. “For example, all non-union employees hired since 2009 and new hires of 28 unions have been moved to defined contribution plans, which help Boeing to better predict and manage financial risks, while still providing its employees a market-leading retirement benefit.”
Boeing said the transition period will include a three-year benefit to employee 401(k) accounts equal to 9 percent of eligible income in 2016, 8 percent of income in 2017 and 7 percent of income in 2018. There will also be pay-period contributions to 401(k) accounts of 3 percent to 5 percent of eligible income, depending on age, beginning in 2019.
“The new benefit will supplement employees’ defined benefit pensions earned through Dec. 31, 2015,” Boeing said. “All pension benefits earned through the end of 2015 are the employees’ to keep.”