WellPoint Pension Freeze not Attributed to Cost

March 20, 2006 (PLANSPONSOR.com) - WellPoint Inc. has frozen its defined benefit pension plan for most of its employees and beefed up its 401(k) offering, following a growing line of other companies.

Unlike the others, though, the company does not attribute its decision to financial strain, the Indiana Business Journal reports. The plan is actually overfunded by $229 million.

WellPoint made its decision to give employees more benefits flexibility, according to spokesperson Jim Kappel. “It’s not a take-away at all. As a matter of fact, it’s a higher value for all employees,” said Kappel, according to the IBJ.

While its cash balance pension plan contributions were frozen as of January 1, the company increased its dollar-for-dollar match of employee contributions up to 6% of salary from 4.5% in its 401(k) plan. In addition, employees become immediately vested in the employer money instead of waiting a year and they have more investment options.

Kappel said employees are not taking a financial hit from the DB plan freeze and that the company actually increased the amount it spends on total compensation, including base pay, bonuses and benefits. He added that employees with more years of service and nearing retirement will continue to receive DB plan contributions.