Fidelity Investments will terminate its defined benefit plan effective May 31 and increase its matching contribution to its existing 401(k), said spokeswoman Anne Crowley.
Fidelitys profit-sharing plan, the mainstay of the companys retirement program, will remain unchanged.
Contributions to the 401(k) plan will rise to 7% of pay from 5%; contributions to the profit-sharing plan will remain around 10%.
Ms. Crowley provided no data on the size of Fidelitys retirement plans. According to the 2007 Money Market Directory, Fidelity/FMR had $4.3 billion in its profit-sharing plan and $727 million in its DB plan as of December 2004.
Ms. Crowley said the companys defined benefit plan has been a relatively small component of its retirement program, providing on average substantially less than 20% of an employees replacement income upon retirement. The 32,000 Fidelity employees vested in the companys defined benefit plan can either take a lump-sum payout, which can be rolled over to their profit-sharing plans, or receive their accrued benefits in the form of an annuity. On balance, Fidelity expects the restructuring to better serve the interests of employees, Ms. Crowley said.
In addition, the company will begin contributing $3,000 a year to a new tax-free plan to cover employees health care expenses in retirement.