The retirement plans for retail and salaried employees at Goodyear Tire & Rubber will start changing over the next two years as the company seeks to improve global competitiveness while significantly reducing its cost structure.
“These changes allow us to continue to provide the kind of compensation packages that are competitive and will attract and retain talented associates,” said Kathleen Geier, Goodyear’s senior vp-human resources. “They are also consistent with our goal of reducing costs in excess of $1-billion by the end of 2008.”
Most benefit plan changes will start in 2008, with the most significant pension plan changes occurring in 2009. According to Geier, Goodyear expects to reap an after-tax savings of $80 million to $90 million in 2007, $100 million to $110 million in 2008, and $80 million to $90 million in 2009 and beyond.
Benefit plan changes include: increasing the amounts that current and future salaried retirees contribute toward medical benefits; re-designing retiree medical benefit plans to minimize cost impact on premiums; closing the company’s Medicare supplement plan to new entrants; and discontinuing company-paid life insurance for salaried retirees.
Changes to the pesion include: freezing the current salaried defined benefit pension plans as of December 31, 2008; Replacing the defined benefit pension plans with enhanced 401(k) accounts with varying levels of company contributions; and introducing company-matching contributions for the salaried 401(k) savings plan at 50% of the first 4% of annual pay beginning January 1, 2009.
