The action will affect 8,000 current workers, but not retired workers or hourly employees since Chrysler stopped offering pensions to new employees about a decade ago, according to the Detroit Free Press.
The 8,000 Chrysler workers that are affected and who have earned a pension will no longer accrue additional benefits as of December 31, 2013. They will, however, be able to retain pension benefits earned so far. The automaker said it would provide retirement planning counseling to workers as part of its decision.
The Free Press reported that starting in 2014, Chrysler will transition these workers into a defined contribution plan, which is already offered to salaried workers who were hired as of January 1, 2004.
“We recognize the importance employees place on retirement benefits. By offering transitional financial counseling at no cost and providing diversified investment options in our participant-directed retirement and savings plans, employees can more easily manage their financial health and better prepare for the future,” said Chrysler Senior Vice President for Human Resources Nancy Rae, according to the news report.
The action by Chrysler follows a similar one made by General Motors Company in 2012, where pensions were also frozen and workers transitioned over to 401(k) plans (see “GM Freezing Salaried Worker Pension”). GM then made a lump sum offering and completed a partial pension buyout to reduce risk (see “GMTransfers Some Pension Risk”).