Pension and benefits changes to save $25 million annually
In an effort to cut costs, Canada's second-largest department-store chain is making changes to its pension plan and retiree benefits.
Sears Canada Inc., which employs 37,000 staff, will switch its employees' defined benefit pension plan to a defined contribution plan on July 1, 2008. The Toronto-based retailer will also stop paying for some retiree health benefits at the same time.
The company hopes the benefits shake-up will result in a cost savings of about $25 million a year.
More and more companies are moving away from defined benefit pension plans, in which companies are committed to pre-determined payouts. Defined contribution plans don't contain the same commitments or financial risk.
"This pension re-design will keep Sears Canada in step with the way retirement plans have evolved in Canada while still ensuring that a competitive plan exists for our associates that is in alignment with the Canadian retail industry," said Dene Rogers, president and chief executive officer, in a statement.
"A key feature of the new plan design is that it allows associates to have more control over their retirement savings and be able to take advantage of increased investment options for which the plan now provides."
The changes will not affect already retired employees.
Sears Canada Inc., which employs 37,000 staff, will switch its employees' defined benefit pension plan to a defined contribution plan on July 1, 2008. The Toronto-based retailer will also stop paying for some retiree health benefits at the same time.
The company hopes the benefits shake-up will result in a cost savings of about $25 million a year.
More and more companies are moving away from defined benefit pension plans, in which companies are committed to pre-determined payouts. Defined contribution plans don't contain the same commitments or financial risk.
"This pension re-design will keep Sears Canada in step with the way retirement plans have evolved in Canada while still ensuring that a competitive plan exists for our associates that is in alignment with the Canadian retail industry," said Dene Rogers, president and chief executive officer, in a statement.
"A key feature of the new plan design is that it allows associates to have more control over their retirement savings and be able to take advantage of increased investment options for which the plan now provides."
The changes will not affect already retired employees.
