Benefits February 1, 2006

Nissan Follows Trend of DB to DC Switch

February 1, 2006 (PLANSPONSOR.com) - Nissan North America has frozen its defined benefit pension plan to new hires as of January 1 and is offering instead a 401(k) type defined contribution plan.
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The Tennessean reports that the DB to DC switch affects all new hires at Nissan’s manufacturing plants in Smyrna, Georgia; Decherd, Tennessee, and Canton, Mississippi, and at its new headquarters scheduled to open this summer in Nashville, Tennessee.

class=”bodytext”> In addition, effective January 1, 2007,the company plans to pay retirees in its manufacturing division an annual stipend to supplement Medicare coverage to people who were younger than 65 at the end of last year, rather than include them in the company-sponsored medical plan, according to the news report.

class=”bodytext”> Nissan says the changes are part of an effort to keep its retirement plan viable and to remain competitive in the automotive industry. “While Nissan sales and profitability remain strong today, strong sales do not necessarily equal success tomorrow,” the company said in a letter to retirees.

class=”bodytext”> Nissan joins a growing list of companies freezing their defined benefit pension plans and switching to defined contribution plans for their employees (See Two More Companies Join DB Plan Freezing List).

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