Nonunion employees hired on or after January 1, 2009, will not be eligible for the defined-benefit plan. Instead, Chicago-based Boeing will enhance the defined-contribution plan for those employees.
Boeing will make an automatic contribution of 3 percent, 4 percent or 5 percent of pay to the plan, with the contributions based on employee age. Additionally, Boeing will fully match employees’ contributions up to the first 4 percent of pay and will match 50 percent of employee contributions on the next 4 percent of pay.
Currently, Boeing matches 75 percent of employee contributions up to 8 percent of pay.
“This new approach addresses new employee preferences for retirement programs that offer flexibility and portability and responds to market trends and practices of peer companies. At the same time, it allows us to better manage our retirement plan expenses and reduce financial risk,” Rick Stephens, senior VP human resources and administration, said in a statement.
Boeing, which last year reported net income of $4.1 billion on revenue of $66.4 billion, joins a long and growing list of major corporations—including Hewlett-Packard, IBM and Sears Holdings—that have phased out defined-benefit plans.
The most recent corporation to move way from its defined-benefit plan is McLean, Virginia-based Gannett & Co., which will freeze its plan and beef up its defined-contribution plan effective August 1.
Last year, just 54 percent of Fortune 100 companies offered a defined-benefit plan to new salaried employees, a sharp decline from 2002, when 83 percent did so, according to a recent Watson Wyatt Worldwide survey.