Oregon-based Blount International to Freeze its DB Plan

August 9, 2006 (PLANSPONSOR.com) - Blount International Inc. announced it will freeze its defined benefit plan for all employees after January 1, 2007, a move the outdoor product and industrial and power equipment manufacturer expects will save between $16 and $23 million in expenses over the next five years.

The change, which has no affect on current retirees or former employees, is a familiar echo as more and more companies are shifting from DB to DC plans in an effort to shave costs, keeping cash on the balances sheets rather than locked in pension plans. However, experts disagree on whether freezing plans will deliver companies the savings they expect (See The Bottom Line: Back to the Drawing Board ).

One study, released by Merrill Lynch in July, warned against being to haste in freezing the plan (See Study Warns Companies Against Being Too Quick to Freeze DB Plans ).

According to a release from Oregon-based Blount International, employees who are already participating in the plan will stop accruing DB benefits and be shifted to a 401(k) plan, where the company intends to make contributions between 3% and 5% of employees’ annual wages.

The amount contributed to the 401(k) plans will be based on an employee’s years of service. The company will continue its existing program of matching employee contributions and an employee will be eligible to receive a contribution of up to 9.5% of eligible wages under the redesigned 401(k) program.

“The new design of the retirement programs meets our company’s objective of continuing to provide employees with a competitive retirement benefit while lowering the company’s annual expense,” said Blount International’s Chairman and CEO James Osterman in a release. “Providing employees with a competitive, flexible and portable benefit will allow us to continue to attract and retain talented employees and at the same time enable us to better predict and control the company’s future costs.”