Boeing to end pension plans for nonunion employees

NEW YORK Thu Mar 6, 2014 3:51pm EST

The Boeing logo is seen at their headquarters in Chicago, April 24, 2013. REUTERS/Jim Young

The Boeing logo is seen at their headquarters in Chicago, April 24, 2013.

Credit: Reuters/Jim Young

Related Topics

NEW YORK (Reuters) - Boeing Co (BA.N) said on Thursday it will end pension plans for 68,000 nonunion employees, including its chief executive, marking the latest step in the company's shift away from defined-benefit plans.

The change takes effect January 1, 2016, and reflects the company's effort to reduce the growing costs of its pension plans. Boeing said it expects to take a $110 million non-cash charge in the first quarter for the pension change.

The company previously announced charges of $140 million and $80 million for making similar changes to labor agreements with union machinists in the Seattle area and in St. Louis.

Since 2009, all new hires of nonunion employees and new hires of union employees represented by 28 unions have received defined-contribution plans instead of pensions.

Boeing said the defined-contribution plans allow it to "better predict and manage financial risks."

Nonunion workers including managers and executives will keep what they have earned in their pensions through December 31, 2015, and then switch to a new defined-contribution retirement plan, Boeing said.

The employees will also keep an existing 401(k) plan in which Boeing matches a portion of their savings.

The changes mirror those made to benefits of union workers.

Earlier this year, 31,000 union machinists in the Pacific Northwest narrowly approved a similar change as part of an eight-year extension of their labor contract.

In exchange for that and other concessions, Boeing agreed to build its new 777X jetliner and its wings in Washington state, ensuring that the machinists would continue to perform that work.

Boeing said it is making the changes so it can continue paying "market-leading" retirement benefits while also "assuring our competitiveness by curbing the unsustainable growth of our long-term pension liability."

(Refiles to add previously omitted advisory line for Update 2: "Adds details on defined-contribution plans, union agreements")

(Reporting by Alwyn Scott; Editing by Saumyadeb Chakrabarty and Meredith Mazzilli)

FILED UNDER:
We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/
Comments (16)
zigo wrote:
Obamacare at work!

Oops, no, this is not a health care plan that gets cancelled but a pension plan.
But I’m sure the Republicans will pound on this as hard as on any health care plan cancellation. (crickets)

Mar 06, 2014 3:00pm EST  --  Report as abuse
SunnyDaySam wrote:
One more great reason for Unions.
“These are the values inspiring those brave workers in Poland … They remind us that where free unions and collective bargaining are forbidden, freedom is lost.” –Ronald Reagan, Labor Day Address at Liberty State Park, 1980

Mar 06, 2014 4:29pm EST  --  Report as abuse
Karadion wrote:
SunnyDaySam,

Too bad you are not using the quote accurately. Nowhere in this article talks about being in a union especially RTW states illegal. Right-to-Work states do not prohibit unions either. RTW prohibits people from BEING COMPELLED to join a union. Collective bargaining can still function for those who are in a union that they voluntarily chose to be a part of.

Mar 06, 2014 4:47pm EST  --  Report as abuse
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.