Pacific Business News reports the pension plan was burdensome on the Hawaii-based company’s financials, and company president Verne Santos says the new 401(k) program is less costly and still allows new employees to save toward retirement. The company still contributes annually to the pension plan for unionized employees.
The past several years saw a trend of sponsors freezing their defined benefit plans in favor of new 401(k) programs or 401(k) match contribution enhancements due to both costs and administrative reasons (see One Fifth of DB Participants Had Plans Frozen ). However, a recent study conducted by Pyramis and executed in association with Asset International, Inc., publisher of PLANSPONSOR , found that plan sponsors have, for the most part, concluded their formal assessments of the merits of freezing or closing their DB plans and are now focused on a long-term view (see Survey Indicates DB Freeze Wave is Over).
Ironically, now a number of companies are turning to their 401(k) match contributions to cut costs, including those that redirected retirement benefits from pension plans to 401(k)s (see NCR Reduces 401(k) Match ).