Sears Holding Corp., Hoffman Estates, Ill., has told employees it will stop making contributions to the U.S. defined benefit plan as of Dec. 31, and employees will stop accruing pension benefits at that date, said spokesman Bob Carr. The company, which was formed by the merger of Sears, Roebuck and Co. and Kmart Holding Corp. earlier this year, will increase matching contributions to its 401(k) plan; the size of that plan could not be learned by press time.
Mr. Carr said part of the reason the company is making the change is to be competitive with the "best-in-class" retailers, many of which do not offer defined benefit plans. He also cited market volatility related to plan funding and worker interest in plans that are portable.
The Sears, Roebuck U.S. pension fund had assets of roughly $2.4 billion as of Oct. 31, 2004, according to the company's annual report. The filing said the plan was underfunded by $884 million as of Oct. 31.