Citigroup to Freeze Pension

November 3, 2006 ( - Citigroup Inc. has said it will freeze its defined benefit pension plan effective in 2008.

Bloomberg reports that Michael Schlein, the bank’s senior vice president of corporate affairs, wrote in a memo that the company plans to increase matching contributions to its 401(k) plans for domestic employees.

Citigroup will match up to 8% of the pay for 401(k) contributions made by employees who earn less than $100,000, and 6% for those with higher salaries, the memo said, according to Bloomberg. The bank previously matched up to 3% for employees earning less than $100,000.

Citigroup joins a bevy of companies shifting focus to defined contribution plans from defined benefit plans, usually in an effort to make costs more predictable.

Aon announced this week it was changing the formula for calculating its defined benefit accruals for US workers, and plans to beef up its 401(k) match offering (See Aon Announces Changes to DB Plans ).