Dow to freeze US pensions

Dow is freezing accruals to its two defined benefit pension plans at the end of 2023. The move affects current employees but not retirees or former employees vested in the pensions. Some 14,400 active employees of the 95,000 participants in Dow’s US plans will be affected. The company estimates that the move will reduce its pension obligations by $350 million–$375 million. In addition, Dow is contributing $1 billion to its pension plan this year. Globally, the firm’s pensions have $35.3 billion in benefit obligations and $26.4 billion in assets, for a funding ratio of 74.8%. Pension experts often see a ratio of 80% as the threshold for healthy pensions. Defined benefit pensions are on the decline in the corporate world, which increasingly favors defined contribution plans. According to the advisory firm Willis Towers Watson, 236 firms among the Fortune 500 offered defined benefit plans in 1998. As of 2019, only 13 did. DuPont froze its pension plan in 2018, a move that rattled DuPont retirees.