Eastman Kodak Co., Rochester, N.Y., is moving all of its U.S. employees to a cash balance plan with a single pension benefit formula, effective Jan. 1, spokesman Christopher Veronda said in an e-mail.
In a letter sent to employees and obtained by Pensions & Investments, Kodak's senior management agreed to a uniform benefit formula, which includes transferring the remaining participants in the company's traditional defined benefit plan into the cash balance plan.
In 1999, Kodak converted to a cash balance plan, but allowed employees at that time the choice to remain in the traditional pension plan. There are currently two formulas for calculating benefits: one for the traditional DB and one for the cash balance plan.
Starting Jan. 1, all employees will receive pay credits equaling 7% of monthly compensation added to their cash balance accounts. Current cash balance participants receive a 4% credit in addition to a company match of up to 3% in a defined contribution plan. The new benefit formula will eliminate the company match.
Also, as part of the changes, the three-year vesting period for the Kodak Retirement Income Plan, the defined benefit plan, will be eliminated for all active employees.
The firm said in a conference call with investors Tuesday that the changes are expected to reduce future benefit obligations by about $55 million and reduce costs by $12 million annually.
Kodak's U.S. pension plan assets were $4.2 billion as of Dec. 31, according to the firm's most recent 10-K report. The size of the defined contribution plan could not be learned by press time.