General Mills is freezing its U.S. defined benefit (DB) pension plans, according to a recently filed 10-K with the Securities and Exchange Commission (SEC).
According to the filing, General Mills sponsors a number of DB plans for employees in the United States, as well as other countries. The firm says, “Changes in interest rates, mortality rates, health care costs, early retirement rates, investment returns, and the market value of plan assets can affect the funded status of our defined benefit plans and cause volatility in the net periodic benefit cost and future funding requirements of the plans. A significant increase in our obligations or future funding requirements could have a negative impact on our results of operations and cash flows from operations.”
General Mills adds that its DB plans in the United States are subject to the requirements of the Pension Protection Act (PPA). “In the future, the PPA may require us to make additional contributions to our domestic plans,” the filing says, although the firm indicates it does not expect to be required to make any contributions in fiscal 2017.
The company will freeze the pay and service amounts used to calculate pension benefits for active employees who participate in the United States DB plans as of December 31, 2027. Beginning January 1, 2028, active employees in the United States will not accrue additional benefits for future service and eligible compensation received under these plans.
According to the SEC filing, these changes resulted in a $130.9 million decline in the projected benefit obligation as of May 28, 2017, due to the decrease in expected future pensionable compensation.