Exelis Inc. will freeze its defined benefit pension plan covering salaried employees at the end of 2016 to complete a process it began in 2011, the McLean, Va.-based defense contractor said.
In an 8-K filing last week with the Securities and Exchange Commission, Exelis said benefit accruals will stop after Dec. 31, 2016.
The pension plan “represents a large liability for the company and sunsetting the plan at the end of 2016 is one of the broad range of proactive steps we are taking to help Exelis continue to be competitive and generate value for our shareholders in the long term,” an Exelis spokesman said.
Before freezing the salaried employees plan, Exelis closed it to new employees hired after Sept. 30, 2011. Also in 2011, eligible participants were given a choice of accruing future benefits in the plan or receiving enhanced employer contributions to the company's 401(k) plan effective Jan. 1, 2012. At year-end 2012, the pension plan was significantly underfunded, at 70%, with $3.8 billion in assets and $5.4 billion in liabilities, according to Exelis' most recent 10-K report.
"Defense contractor to freeze salaried employees' pension plan in 2016" originally appeared on Business Insurance's website, a sister publication of Pensions & Investments.