CHICAGO (Reuters) - Wal-Mart Stores Inc (WMT.N) plans to end automatic profit-sharing contributions it has given employees for 39 years as part of a benefits overhaul that the world’s largest retailer says will let employees get more cash up front.
Starting in February, the company will end the profit-sharing contributions, which had equaled up to 4 percent of pay. It will instead offer more funds for bonuses, a 401(k) retirement plan contribution match and cash for medical expenses, according to a memo to Wal-Mart employees that was obtained by Reuters.
The profit-sharing, which has been in place since 1971, went into a program that let employees access the funds only at retirement, Wal-Mart spokesman David Tovar said.
In place of the profit-sharing, Wal-Mart will pay matching contributions to employees’ 401(k) plans, at up to 6 percent of pay.
The company will also use some of the money saved on profit sharing to offer employees more money in quarterly and annual cash bonuses, Tovar said.
The company will offer employees enrolled in some of its medical plans a Health Reimbursement Account, under which Wal-Mart will provide funds to pay for medical expenses like deductibles and co-insurance. The company will provide $500 for associate-only plans and $1,000 for plans for associates and dependents.
Tovar declined to say whether the new benefit structure would save Wal-Mart money.
“Associates have the potential to get more bonus money up front instead of getting a contribution from the company that they could not touch until they retire,” Tovar said.
Reporting by Brad Dorfman, editing by Matthew Lewis