Armstrong World Industries, Lancaster, Pa., will freeze its defined benefit plan to almost half of its "non-production salaried" employees, starting in March, to reduce future pension expenses, according to a news release. The company will freeze benefits of 730 employees in its $2 billion Retirement Income Plan whose combined age and continuous years of service do not add up to at least 60, said spokeswoman Dorothy Brown Smith. Employees who do not meet the new requirements will be eligible for an enhanced company match in Armstrong's 401(k) plan. Armstrong has $4.1 billion in total defined contribution assets, according to the Nelson's Marketplace database. Armstrong's employee match will now be 6% on a maximum contribution of 8% of salary. The maximum company match was 3%.
The remaining 940 employees who meet the new requirements will continue to accrue benefits but will be subject to "early retirement changes," said the release. Ms. Brown Smith said those employees cannot retire with full benefits until they are 65 years old; the previous retirement age was 55.
The company estimated that the changes will reduce its retirement-related expenses by $13 million this year and $15 million in 2007.