AUBURN HILLS, Mich. — Chrysler Group LLC said Friday it is freezing the pensions of roughly 8,000 U.S. salaried employees at the end of the year.
The U.S. automaker said it is making the move to stay in line with industry trends and to comply with IRS regulations.
The Auburn Hills, Mich., company declined to detail the specifics of the IRS issue, but said it is in compliance. Company spokesman Shawn Morgan said the compliance matter is not related to underfunding of the pension.
U.S. companies in general have moved away from traditional, or “defined benefit,” pensions because of the cost. General Motors Co. made a similar move last year when it froze traditional pension benefits for 19,000 salaried workers hired before 2001. Such pensions guarantee a specific payment to retirees.
Chrysler said that all affected employees will be shifted to a defined contribution plan.
In addition, it lowered the age at which employees can begin claiming all of their retirement savings to 58 from 62.
The company closed its pension plans to new participants at the start of 2004. The freeze does not affect those hired from that point forward, or those who have left the company or retired. All of the benefits accrued through Dec. 31 will remain in place, and employees will not lose what they have earned to that point.
Chrysler, majority-owned by Italian company Fiat SpA, has 65,500 employees worldwide. Last month, Fiat reported a first-quarter loss, caused in part by weaker sales at Chrysler.
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