3M to freeze its pension plan

investmentnews.com:

3M is freezing its pension plan, the company announced Monday, a decision that contrasts with IBM’s recent move to add a cash-balance program for its workers.

The U.S. pension freeze at 3M won’t occur until 2028 and applies only to nonunion workers, the company stated, noting that it has been favoring a shift toward its 401(k) plan for some time. The measure comes as pension plans’ funded ratios have reached levels not seen in years, giving the employers that sponsor them an affordable exit through pension risk transfers, in which the assets are moved to insurance companies.

“This is an important decision for 3M as it helps to set up both companies for future success. This was also a difficult decision because it impacts employees across the U.S.,” 3M CEO Mike Roman said in the announcement. “To help those impacted, we are providing five years of advance notice to ensure our employees can plan alternative strategies to meet their post-retirement income needs.”

3M did not respond to a request for comment by deadline. The firm’s annual report for 2023 has not been released, but 2022 data from a Form 10-K filing with the Securities and Exchange Commission show a funded ratio for the pension of 93.65%, with fair value assets for the plan at $12.6 billion and net obligations of $13.5 billion.

The company closed off its pension plan to new hires beginning in 2009. That the forthcoming freeze does not affect union employees hints at the demand among unions for access to traditional pensions. Last year, bargaining between the United Auto Workers and the three big U.S. car makers – Ford, General Motors and Stellantis – focused in part on a proposed reintroduction of pensions. However, the UAW ended its strikes on terms that did