8-KLeadership ChangesRegulation FDExhibits & Filings

Howmet Aerospace Inc. 8-K Report, Executive Changes (Jan 8, 2018)

Filed January 8, 2018For Securities:HWM

Summary

This 8-K filing from Arconic Inc. (now Howmet Aerospace Inc.) announces the cessation of future benefit accruals under all U.S. defined benefit pension plans for salaried and non-bargained hourly employees, effective April 1, 2018. This change affects approximately 7,900 employees. While future service will not earn additional pension benefits, it will continue to count towards early retirement eligibility based on benefits accrued up to March 31, 2018. Affected employees will transition to defined contribution plans with enhanced employer contributions. The company anticipates a one-time net financial impact in Q1 2018, including a liability decrease of approximately $140 million related to the reduction of future benefits and a curtailment charge of approximately $5 million pre-tax. For the full year 2018, pension-related expense is expected to decrease by about $50 million pre-tax compared to 2017. These figures are preliminary and based on initial year-end results.

Key Highlights

  • 1Arconic Inc. is freezing future benefit accruals for all U.S. defined benefit pension plans for salaried and non-bargained hourly employees, effective April 1, 2018.
  • 2Approximately 7,900 U.S. employees will be affected by this change.
  • 3Service earned after March 31, 2018, will still count towards early retirement provisions based on accrued benefits as of that date.
  • 4Affected participants will see an increase in employer contributions to their defined contribution plans.
  • 5The company expects a pre-tax liability decrease of roughly $140 million and a curtailment charge of approximately $5 million in Q1 2018.
  • 6Pension-related expenses for the full year 2018 are projected to be lower by approximately $50 million pre-tax compared to 2017.

Frequently Asked Questions

The company is freezing future benefit accruals under all its U.S. qualified and non-qualified defined benefit pension plans for salaried and non-bargained hourly employees. This means employees will no longer earn additional pension benefits based on service or compensation after March 31, 2018.

Service earned after March 31, 2018, will continue to count towards eligibility for early retirement provisions. Importantly, benefits already earned by employees up to March 31, 2018, will be preserved and available when they reach retirement eligibility.

The company anticipates a net financial benefit. In the first quarter of 2018, it expects to record a reduction in pension liability of approximately $140 million and a curtailment charge of about $5 million (pre-tax). For the full year 2018, pension expense is expected to decrease by approximately $50 million (pre-tax) compared to 2017.

Yes, affected participants will receive an employer contribution of 3% of eligible compensation, and an employer matching contribution of up to 6% of eligible compensation, under the company's defined contribution plans. Additionally, there will be a transition employer contribution of 3% of eligible compensation from April 1, 2018, through December 31, 2018.