Benefits October 14, 2005

Unions Agree to Pension, Benefit Cutbacks

October 14, 2005 (PLANSPONSOR.com) - Union members at Solutia Inc. have agreed to a national labor contract that includes health and welfare benefit limits for workers at five plants.
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St. Louis-based Solutia said in a Web statement that the benefit changes in the new bargaining agreement are expected to aid the company as it expects to emerge from bankruptcy in the first quarter of 2006,and that the pacts provided “s ignificant cost savings and labor stability.” Solutia manufactures performance films, specialty chemicals, and integrated nylon products.

“The ratification of these agreements is a strong endorsement of the future of our company by a very important segment of our employees. These changes will help us emerge from bankruptcy as a viable, well-positioned company,” said Jeffry Quinn, president and CEO, Solutia Inc. in the statement.

The agreements, which take effect January 1, 2006, provide for changes to pension and welfare benefits consistent with those Solutia had previously implemented for US non-union employees, the company said in the statement. The changes include:

  • a phase out of company-provided retiree health care benefits by October 31, 2016.
  • freezing the defined benefit pension plan at the benefit level of $55 per month per year of service with no further accrual.
  • offering a different health care plan beginning January 1, 2006. The retirees who benefit under the settlement are those who will be eligible for Medicare by 2016. The new plan requires 90/10 co-payments for the first time. Workers previously received 100% coverage after their premium contributions were made.

The new plan also calls for specific increases in employee health care premium contributions over the five-year contract term. The unions successfully avoided an obligation for employees to pay a percentage of the premium that could increase over the term to an unlimited amount.

Approximately 14% of Solutia’s 4,100 US employees are represented by labor unions. These seven local labor unions represent employees at five Solutia sites: Anniston, Alabama; Sauget, Illinois (Krummrich Plant); St. Louis, Missouri. (Queeny Plant); Trenton, Michigan; and Springfield, Massachusetts (Indian Orchard Plant).

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