Benefits February 1, 2006

Nissan Follows Trend of DB to DC Switch

February 1, 2006 (PLANSPONSOR.com) - Nissan North America has frozen its defined benefit pension plan to new hires as of January 1 and is offering instead a 401(k) type defined contribution plan.
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The Tennessean reports that the DB to DC switch affects all new hires at Nissan’s manufacturing plants in Smyrna, Georgia; Decherd, Tennessee, and Canton, Mississippi, and at its new headquarters scheduled to open this summer in Nashville, Tennessee.

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class=”bodytext”> In addition, effective January 1, 2007,the company plans to pay retirees in its manufacturing division an annual stipend to supplement Medicare coverage to people who were younger than 65 at the end of last year, rather than include them in the company-sponsored medical plan, according to the news report.

class=”bodytext”> Nissan says the changes are part of an effort to keep its retirement plan viable and to remain competitive in the automotive industry. “While Nissan sales and profitability remain strong today, strong sales do not necessarily equal success tomorrow,” the company said in a letter to retirees.

class=”bodytext”> Nissan joins a growing list of companies freezing their defined benefit pension plans and switching to defined contribution plans for their employees (See Two More Companies Join DB Plan Freezing List).

Benefits January 31, 2006

VT House Gives First Approval to Retiree Health Bill

January 31, 2006 (PLANSPONSOR.com) - A bill giving state police officers a better chance to qualify for state-supported health insurance after they retire has received preliminary approval by the Vermont House.
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According to news reports, the bill proposes a “recapture” provision that would permit those state police retirees to qualify for the shared-cost insurance program when they turn 50. The bill also would create a tiered system for other state workers to qualify for health insurance when they retire.

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State workers currently can qualify for the shared-cost insurance upon retirement after working five years. That would go up to 10 years under the bill that is now due for final debate on Wednesday.

Under existing rules, state troopers can retire after working 20 years, but, if they’re younger than 50, they do not qualify for a health insurance plan in which the state pays 80% and the retiree the rest, according to the news reports. The bill calls for retirees to get the insurance if they work a shorter period, but they would be responsible for more of the cost, the report indicated.

Not everyone supports the measure, however. The state personnel department worries about the potential cost of a provision in the bill that would give state police officers an opportunity to qualify for state-supported health insurance years after they retire.

The administration and others also say they do not want to establish a precedent that could be expanded to other classifications of state workers in the future, especially at a time that new accounting rules are driving up the cost of the various state retirement systems and officials are having a tough time finding ways to pay them, the news reports said.

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