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.