A Wall Street Journal news report said participants will cease accruing benefits in the DB plan as of July 1. Employees were informed of Cigna’s plans Monday, according to the Journal.
In addition, all active employees not currently vested will become vested effective July 1, with the changes affecting Cigna’s 26,000 employees but not its more than 40,000 retirees.
The company said the pension freeze will allow it to take a one-time accounting credit of $39 million, plus reap annualized savings of approximately $40 million a year.
The retirement savings program changes come as the company takes a variety of cost-cutting moves, including plans announced in January to cut 4% of its work force, or 1,100 positions, by mid-year.
In conjunction with the pension move, Cigna said it will enhance the 401(k) plan as of January 1, 2010, by increasing the company matching contribution to 4.5% from 3% of eligible pay deferred. All employees will be immediately eligible for the company match as soon as they join the 401(k) plan.
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