In a press release, the Massachusetts-based company, which conducts all its business through its subsidiary River Bank, said accruals in its defined benefit pension plan will be frozen as of December 31. Unlike many companies that have gone the same route, the company claims its move to terminate its defined benefit plan has more to do with pension portability and cost predictability than cost savings.
Gerald Mulligan, president and chief executive officer
at LSB, said in the release, that the decision was made “to
provide each employee with more control over his or her own
retirement resources,” allowing the benefit to be more
easily moved when employees change jobs.
All of the assets of the defined benefit pension plan will go toward paying off the company’s accrued benefit obligations and plan expenses linked to the plan’s termination. According to the release, as a result of the freezing of future pension benefits, LSB will recognize an after-tax curtailment gain of $663,000.
The company’s contributions to the 401(k) and ESOP plans will be tied to each employee’s overall compensation, and LSB expects that its contributions will amount to approximately 7% of participant’s annual pay.
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