3M announced Monday that it will freeze its U.S. non-union pension plans at the end of 2028.
The cost-cutting measures apply to 3M employees and employees of the healthcare company that is spinning off this year.
“This is an important decision for 3M and will help set both companies up for future success,” CEO Mike Roman said in a statement. “To help those affected, we are providing five years’ notice to ensure employees can plan alternative strategies to meet their retirement income needs.”
The Maplewood-based company cut off access to U.S. pension plans for new and rehired employees in 2009 and began transitioning to a 401(k) retirement plan. 3M did not immediately respond to questions about the number of employees affected.
While they remain common in government jobs, only 15% of private sector workers have access to pensions or defined benefit plans, according to the Congressional Research Service. The number of pension participants in the private sector peaked at 30 million in 1980 and now stands at 12 million.
3M's move to eliminate pensions follows other companies in the industry, including General Electric, which made similar announcements in 2019. It will also end benefits that were a big draw for recruiting and retaining employees.
3M employees who are eligible for pension benefits will receive benefits until December 31, 2028. Former employees with vested benefits, retirees and employees receiving pension payments are not affected by the freeze, 3M said.
Company officials did not say how much money the company would save by switching to a defined contribution retirement plan.
3M's long-term pension benefit obligations were expected to be $13.5 billion as of last year, and nearly all of them have been met. The company's annual pension costs have declined in recent years. His pension expenses in 2023 were $145 million.
3M has pledged billions of dollars to settle lawsuits over PFAS and earplugs and will soon lose a quarter of its sales in a spinoff, leading some investors to believe a dividend cut is imminent. I'm worried about that.
