Linwood, Pennsylvania - Major polyurethane foam group Foamex International Inc. is to freeze future benefits under its pension plan on 31 Dec 2007, and add to its 401(k) contributions, to make its future pension costs easier to predict.
The company said from 1 Jan 2008, it will increase its matching contributions to its 401(k) Savings Plan. Foamex also plans to adopt the US Internal Revenue Service safe-harbour formula, by matching 100 percent of the first 3 percent of contributions by its employees, and 50 percent of the next 2 percent of employee contributions.
"These changes allow us to continue to provide a competitive compensation package, which will be effective in recruiting and retaining employees, and give us more predictable retirement plan costs," according to Jack Johnson, president and chief executive officer, quoted in the company's 6 Nov announcement on the changes.
As a result of these moves, Foamex expects to reduce spending on its retirement programmes by $5.6 million to $10.8 million over the next four years, and reduce retirement programme expense by $8.1 million to $13.3 million over the same period.
Actual savings will depend on market returns and conditions as well as employee participation levels in the enhanced 401(k) plan, said the company.