The Stride Rite Corporation has adopted changes to its defined benefit pension plan effective December 31, 2006, and will significantly increase matching contributions to its defined contribution plans beginning January 1, 2007. These changes will shift the future focus of retirement benefits toward the more predictable cost structure of 401(k), or defined contribution plans and away from the defined benefit pension plan.
The changes to the plans will affect most associates and senior management. They include:
Stopping the accrual of future benefits in the company’s defined benefit pension plan and fully preserving all retirement benefits that employees will have earned as of December 31, 2006.
Redesigning the 401(k) savings plans to significantly improve the company-funded contribution so that there is a dollar for dollar company match on up to 6 percent of salary deferrals.
Adopting other enhancements within the 401(k) savings plans to allow all participants to make full use of the maximum statutory deferral limits.
The changes do not affect the vested accrued pension benefits of former associates, including Stride Rite retirees.
“Continuing to support our associates retirements while maintaining Stride Rite’s financial strength and stability is an issue that we have given careful consideration to over the past year,” said David Chamberlain, Stride Rite’s Chairman and CEO. “We believe that these changes, while difficult, will achieve a balance between controlling our pension costs, while still enabling our associates to prepare for retirement.
“These actions are being taken to provide Stride Rite with a more predictable and affordable cost structure for retirement benefits and will enhance our ability to compete. Many companies today, including most of the ones that we compete directly with, do not sponsor defined benefit pension plans. Furthermore, we believe that these steps are both prudent and appropriate at a time of uncertainty in the legislative and regulatory direction regarding defined benefit pension plans.”
