San Mateo, CA-based transportation firm Con-way is switching from its current defined-benefits pension plan to a 401(k) employee- retirement savings system.
Under Con-way’s new 401 (k) plan, which starts Jan. 1, 2007, the employee-matching contribution will double from the current level of 50% for the first 3% of the employee’s pay to 50% of the first 6%. The company also plans to make a new Basic Contribution to the 401(k) accounts of all employees, equaling 3% to 5% of the employee’s pay, depending on years of service.
“Pension plans are under pressure from market forces and legislative and regulatory mandates,” said Douglas Stotlar, Con-way’s president & CEO. “With these changes, we’re in a better position to provide eligible employees with a pension benefit as part of their overall retirement package.”
He added that the retirement plan changes are intended to reduce the company’s exposure to pension cost volatility and make pension plan expenses more predictable. “This is a prudent decision for our employees and our collective future,” Stotlar said. “It preserves pension benefits already earned, increases the company's cash contributions to employee 401(k) accounts, and provides a more flexible and valuable mechanism for employees to save towards retirement.”