Thursday, February 23, 2012

Bank of America freezing pension plan

Bank of America is freezing its pension plan effective July 1, the bank said Thursday.

Instead, the Charlotte bank will begin contributing 2 to 3 percent of an employee's salary to his or her 401(k) in addition to the standard match of 5 percent of an employee's contributions.

Employees will retain all pension plan benefits they have earned to date, bank spokesman Scott Silvestri said.

Private-sector companies across America have been dropping pension plans over the past two decades as the costs of so-called "defined-benefit" plans ballooned. Many have switched to defined-contribution plans like 401(k) matches, as Bank of America has now done.

About 70 percent of the Fortune 100 companies have already made the switch, according to human resources consulting firm Towers Watson. During the recession, many companies began freezing or ending 401(k) matches.

Bank of America had about 282,000 full-time employees at the end of the year, down from about 288,000 at the end of 2010. About 15,000 are in Charlotte.

The bank has been aggressively seeking to cut costs through a program known as Project New BAC, named after the company's stock ticker.

Silvestri said he did not have an estimate on how much the change will save the company.