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Benefits August 23, 2006
Tenneco Estimates $11M Annual Savings from DB Freeze
August 23, 2006 (PLANSPONSOR.com) - Auto parts giant
Tenneco Inc. said Wednesday it is freezing its defined
benefit plan in hopes of saving $11 million each year, making
the Illinois-based company the next in a long line of plan
sponsors scrapping their DB plans for defined contribution
arrangements.
Reported by Adrien Martin
The decision will affect about 90% of the manufacturer’s workforce, which includes about 5,400 salaried and non-union hourly employees, who will be eligible to participate in a 401(k) plan. According to a news release, its US pension plans had $332 million in assets and $196 million in liabilities as of September 2005, according to Business Insurance.
Like many companies going the same direction, Tenneco said its move to freeze a DB plan and switch from a DB to DC plan is an effort to trim costs. Whether or not freezing a DB plan will save companies on pension costs in the long run has been the center of some debate, with some saying the move is a fix that won’t provide a large amount of benefits to the bottom line for many years (See DB Freeze No Short-Term Solution, Claim Panelists).
The freeze will take effect January 1, 2007.