DuPont intends to overhaul its pension plan as it merges with Dow Chemical and the new firm, DowDuPont, splits up into three separate companies.
DuPont will freeze its defined benefit pension plan for current employees on Nov. 30, 2018, or when the first of the new companies breaks off from DowDuPont, whichever comes first. When a company freezes a pension, benefits stop accruing in employees’ accounts.
Additionally, the firm will cut off retiree medical, dental, and life insurance benefits for active employees who are less than 50 years old.
The pension changes impact 13,000 out of the 133,000 participants in DuPont’s pension program. Some 4,500 employees will be affected by the insurance benefits changes.
DuPont closed its defined benefits pension plan to new participants in 2007 and shifted toward an enhanced 401K system. This summer, the company launched a buyout program aimed at 18,000 former employees who were vested in the pension program but not yet receiving benefits.
DuPont estimates that the pension freeze will reduce its long-term employee benefits obligation by about $550 million. At the end of 2015, DuPont’s pension obligations totaled about $26 billion.
“The changes will reflect another step in our multiyear analysis and bring us closer to the practices of our global peer set,” Benito Cachinero-Sánchez, DuPont’s senior vice president of human resources, wrote in a letter to employees.
Defined benefits pensions are becoming rare. According to a survey from the consulting firm Willis Towers Watson, only 20% of Fortune 500 firms offered some form of defined benefits pension in 2015, down from nearly 60% in 1998.