Specifically, effective December 31, the company will enhance its 401(k) plan and freeze its nonunion defined benefit (DB) pension plan. “The enhanced 401(k) plan will provide benefits to our associates that are highly competitive in the marketplace in a manner that results in meaningful cost savings to Sysco over time,” the company said.
The company explained that as it was developing its 2013 financial plan, it learned it was facing more than $100 million in additional pension expense for next year, costs primarily driven by continuous declines in interest rates. This substantial uptick would have been in addition to the significant increases seen in two of the last three years.
The change in the retirement programs will result in a net impact of roughly $25 million in additional retirement expense in fiscal 2013. However, this represents a more than $80-million cost-avoidance.