Effective June 30, 2006, the company will freeze the accrued pension benefits for all US employees currently under its defined benefit plans who are not covered under a collective bargaining agreement, according to the announcement. Lydall had previously closed its pension plans to new hires as of December 31, 2005.
The company will increase its 401(k) match contribution to 100% of employee pretax contributions up to 6% of compensation, the announcement said. The enhancements to the 401(k) plan will also include automatic enrollment of employees not currently in the plan.
David Freeman, President and Chief Executive Officer of Lydall, said in a letter to employees, “The costs and complexities of providing defined benefit pension plans directly affect our ability to compete globally with other companies that do not have similar pension obligations.”
The Company expects a reduction in its retirement-related expense of approximately $1.5 to $2.0 million on an annual basis, based on year-end 2005 pension assumptions.
Lydall is joining a long line of companies making the switch from traditional DB plans to defined contribution plans (See Illinois Chemical Company Freezes Its DB Plan ).