In addition, the firm is terminating its retiree health care benefits plan.
Business Insurance reports that, effective January 1, 2009, employees no longer will earn benefits under the defined benefit plan, but Xerium will increase its 401(k) plan match from 100% of deferrals on the first 4% of pay to 100% of deferrals, up to 6% of pay.
Xerium said it is freezing its defined benefit program because of “increasingly stringent pension regulations (that are) expected over the next several years to lead to prohibitively expensive costs of maintaining defined benefit plans,” according to Business Insurance. The company attributed the termination of retiree health care coverage to the increased cost of medical insurance and claims.
Xerium said it expects to reduce pension program and retiree health care liabilities by about $35 million. The pension program at year-end 2007 had $132.7 million in liabilities and $69.5 million in assets, while the retiree health care benefits program was unfunded.