Ryder will freeze its pension plan for current employees who do not meet certain grandfathering criteria and will provide these employees with an enhanced 401(k) savings plan. Grandfathered employees will be given the option to remain in the current pension plan or participate in the enhanced 401(k) savings plan.
With the enhanced 401(k) plan, Ryder will make an automatic contribution of 3% of pay, even if employees do not choose to make a contribution — and will provide a 50% match on employees’ contributions up to 5% of pay. Employees also have the opportunity to earn an additional Ryder contribution of up to 3% of pay, based on company performance. Combining the maximum employee-provided and Company- provided contributions, eligible employees can have as much as 13.5% of pay for their 401(k) investment choices, according to a press release.
Eligibility criteria for grandfathered employees are based on a minimum of 65 points (the sum of an employee’s age and years of service with Ryder as of December 31, 2007). Additionally, Ryder will grandfather employees currently enrolled in the Pension Plan who have at least 20 years of credited service with the Company, regardless of their age. The changes will affect approximately 9,400 of Ryder’s 27,000 employees.
The new program is designed to give eligible employees more choices and investment options than the current pension plan, while also offering the increased portability, flexibility, and accessibility associated with 401(k) plans.
Ryder said that the changes are in line with established marketplace trends, in which retirement savings through a 401(k) plan is increasingly becoming the standard retirement offering by employers, including the firm’s competitors and customers.
“We have taken great care to develop a program that we believe is in the best combined long-term interests of our employees and our Company,” said Ryder Chairman and Chief Executive Officer Greg Swienton. “We’re providing our employees with a significant amount of time, information and resources to help them understand the program, properly evaluate their options and make the right retirement plans and decisions.”