(Reuters) - Fannie Mae and Freddie Mac on Friday said they will terminate their traditional employee pension plans by the end of the year, at the direction of the regulator of the government-controlled mortgage companies.
Edward DeMarco, acting director of the Federal Housing Finance Agency, said ending the defined benefit plans “eliminates risk to Fannie Mae and Freddie Mac and helps to conserve their assets on behalf of taxpayers, one of our main priorities as conservator.”
The plans had previously been closed to new entrants. Employees of both companies may choose a pension annuity, or roll over their benefits to other defined contribution plans such as a 401(k) or an individual retirement account.
Many U.S. companies have in recent years frozen or ended their traditional pension plans to save money and reduce potential payouts, while shifting the burden of investing to employees.
As of February 2013, Fannie Mae employed about 7,200 people, while Freddie Mac employed about 5,000. Both were seized by the U.S. government in September 2008 amid soaring mortgage losses.
Reporting by Jonathan Stempel in New York; Editing by Dan Grebler