8-KOther Events

CINCINNATI FINANCIAL CORP 8-K Report, Corporate Update (Jun 24, 2008)

Filed June 24, 2008For Securities:CINF

Summary

Cincinnati Financial Corporation (CINF) announced significant changes to its retirement benefit plans, as detailed in their Form 8-K filing on June 24, 2008. The primary change involves the introduction of a company match for the 401(k) Savings Plan, effective September 1, 2008. This match will be dollar-for-dollar on the first 6% of eligible compensation deferred by employees. Concurrently, the company is phasing out its defined benefit pension plan. Entry into this plan will be frozen as of June 30, 2008. For most employees, benefit accruals in the defined benefit plan will cease on August 31, 2008. However, current participants aged 40 or older have the option to continue in the defined benefit plan or switch to the enhanced 401(k) plan. This strategic shift aims to enhance CINF's competitiveness in attracting and retaining talent, while also reducing the volatility of its balance sheet related to defined benefit obligations.

Key Highlights

  • 1Introduction of a company match to the 401(k) Savings Plan, effective September 1, 2008.
  • 2The 401(k) company match will be 100% of the first 6% of eligible compensation deferred.
  • 3The company is freezing entry into its defined benefit pension plan as of June 30, 2008.
  • 4Benefit accruals in the defined benefit plan will be frozen for most participants effective August 31, 2008.
  • 5Current defined benefit plan participants aged 40 or older can choose to remain in the defined benefit plan or opt into the 401(k) plan with a match.
  • 6Approximately half of the company's 4,100 associates are expected to be affected by these changes.
  • 7The changes are intended to improve employee benefits competitiveness and reduce balance sheet fluctuations associated with defined benefit plans.

Frequently Asked Questions

Cincinnati Financial is introducing a company match to its 401(k) Savings Plan and phasing out its defined benefit pension plan. The 401(k) match will be dollar-for-dollar on the first 6% of employee contributions, starting September 1, 2008. The defined benefit plan will freeze new entries from June 30, 2008, and benefit accruals for most participants from August 31, 2008.

All associates will be eligible to participate in the company's 401(k) Savings Plan with the company match, effective September 1, 2008. This applies to new entrants and those transitioning from the defined benefit plan, with specific provisions for existing defined benefit participants aged 40 or older.

Entry into the defined benefit plan is frozen as of June 30, 2008. Benefit accruals will cease on August 31, 2008, unless the employee is 40 years or older and chooses to remain in the defined benefit plan. Those leaving the plan will receive a distribution of their accrued benefits, which can be rolled over into the 401(k) plan.

The company is making these changes to remain competitive in attracting and retaining employees by offering attractive retirement benefits. Additionally, these changes are expected to reduce the balance sheet fluctuations associated with managing a defined benefit plan.