In addition, according to the announcement, current DB plan participants’ salaries will be frozen as of December 31, 2007 for purposes of calculating their annual pension benefit. The company announced an increase in its company matching contribution for its defined contribution plan.
As of January 1, 2007 the company will match employee deferrals dollar for dollar up to 6% of pay until 2009 when the match changes to 100% of deferrals up to 5% of pay. In addition, the company said vesting for company matching contributions will be 100% immediate, rather than based on the current 5-year graded schedule.
John Gottwald, Tredegar’s president and chief executive officer, said in the announcement, “Over the past two years we have been working to develop retirement programs which are designed to better meet the needs of today’s mobile workforce, permit more individual involvement in retirement planning and be more affordable, predictable and controllable in terms of cost. The retirement plan changes announced today help meet these objectives.”
The company also announced that, in accordance with the Pension Protection Act of 2006, effective January 1, 2007, employees with three years of service or more will be able to diversify their holdings of company stock in their DC plan accounts.
The company expects the changes relating to the pension plan will reduce its projected benefit obligation by approximately $10 million as of December 31, 2006, the announcement said. In 2007, the changes to the pension plan are expected to reduce the company’s service cost by $600,000, interest cost by $600,000 and amortization of prior service cost components of pension expense by approximately $1.5 million. Meanwhile, the company said it expects the DC plan changes are expected to increase charges for company matching contributions by approximately $700,000.