Tenneco is the latest company to freeze its defined benefit pension plans.
The $4.4 billion manufacturing company said it will replace the plans by making additional contributions under defined contribution plans, effective January 1.
Tenneco said these changes will save about $11 million in expenses (pre-tax) each year, beginning in 2007.
In addition, the company will realize a one-time benefit of between $6 to $7 million in the fourth quarter of 2006 related to curtailing the defined benefit pension plans.
According to Reuters, 5,400 salaried and nonunion hourly employees will be affected. They account for nearly 90 percent of Tenneco’s U.S. workforce.
The company pointed out in a regulatory filing that three executive officers — Timothy R. Donovan, Hari N. Nair, and Timothy Jackson — have employment agreements that don’t permit the company to modify their benefits under certain executive retirement plans.
However, each of the three individuals voluntarily agreed to reduce their retirement benefits by as much as 5 percent.
A fourth executive — Richard Schneider — will enjoy full benefits under the defined-benefit plan, Tenneco said, because he was already fully vested.