Boeing Co. is currently the largest plane maker in the world, manufacturing commercial jetliners and defence, space and security systems. The company has been following the example of other companies located in U.S. in moving away from traditional pension plans.
As a result of the companys efforts to reduce its costs, Boeing Co. made an official statement saying that the pension benefits of more than 68,000 non-union employees and executives will be frozen.
The company also said that the benefit payments will be shifted to a 401(k) retirement-savings plan, which is scheduled to start in 2016. Larger contributions will be made by Boeing to its 401(k) accounts for three years, as it follows – at 9% of eligible income in 2016, 8% in 2017 and 7% in 2018. After this three-year period, the contributions are expected to be from 3 to 5% depending on the age of a certain employee.
The employees, including Jim Mc Nerney, who is the Chief Executive Officer of the company, will be provided with the opportunity to keep any accruals that have already been made to their pensions.
More and more companies located in the U.S. have been shifting from traditional to 401(k) pension plans in order to reduce their long-term costs. As reported by the Wall Street Journal, Boeing Co. stopped offering pension benefits to its new non-union employees in 2009.
About 1.5 billion dollars were contributed by Boeing Co. to its pension fund last year. In its statement, the company explained that a noncash pension-curtailment charge estimated to about 110 million dollars is expected to be recorded.
As reported by Bloomberg, Boeings Senior Vice President of human resources and administration – Mr. Tony Parasida – said in the companys statement that it is willing to offer its employees with an “attractive” benefit, “while also assuring our competitiveness by curbing the unsustainable growth of our long-term pension liability”.
Boeing Co. settled mostly unchanged on Thursday at $128.86, up 0.05% on the day, marking a one-year change of +62.95% and market capitalization of $95.8 billion. According to CNN Money, the 22 analysts offering 12-month price forecasts for Boeing Co. have a median target of $154.50, with a high estimate of $175.00 and a low estimate of $132.00. The median estimate represents a +19.90% increase from the previous close.
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