In a Form 8-K filing with the Securities and Exchange Commission (SEC), the Rochester, New York-based firm announced that effective January 1, 2015, it will implement changes to the Kodak Retirement Income Plan (KRIP) and the Eastman Kodak Employees’ Savings and Investment Plan (SIP).
Kodak explains that currently, under the KRIP, participants accrue a benefit pursuant to a traditional pension formula, which is based upon average participating compensation and years of service, or a cash balance formula, which is calculated based upon a credit equal to 4% of monthly compensation and one-twelfth of the annual interest rate on 30-year Treasury securities. Beginning in 2015, participants in the traditional pension formula will participate in the cash balance formula and will be eligible for a benefit equal to the sum of the pre-2015 traditional benefit and the post-2014 cash balance benefit.
Credits under the cash balance formula will increase from 4% of monthly compensation to 7% of monthly compensation. Monthly interest credits will continue to be made to the cash balance accrual based upon one-twelfth of the annual interest rate on Treasury securities.
The company also announced the matching contribution it provides under the SIP will be eliminated.
Eastman Kodak expects these changes to result in a reduction in the company’s projected benefit obligation related to KRIP of approximately $55 million and a reduction in 2015 expense of approximately $12 million.
The firm filed for Chapter 11 bankruptcy in January 2012, saying at the time that its pension plans were well-funded and implying that the bankruptcy would not affect pension benefits (see “Kodak Bankruptcy Shouldn’t Affect Pensions”). However, Kodak asked for, and a court approved, the termination of other post-employment benefits (see “Court Approves End to Kodak OPEB”).
A copy of the Form 8-K from Eastman Kodak can be found here.