Bank of America Corp. is switching its U.S. employees to a single defined contribution retirement plan at the end of the second quarter.
At June 30, the Charlotte, N.C., company will freeze its defined benefit pension plans, Pensions & Investments reported on Thursday. The bank also will pay an additional 2% to 3% of employees' salaries to its 401(k) plan on top of its current matching contribution of up to 5%, the newspaper stated.
Eligible U.S. employees will keep the pension benefits they had earned up until that point. At Sept. 30, the bank had defined benefit assets of $14.3 billion and defined contribution assets of $18.5 billion, Pension & Investments reported.
Private-sector employee participation in defined benefit pension plans has declined from 28% in 1979 to 3% in 2008, according to data from the Employee Benefit Research Institute. SunTrust Banks Inc. in Atlanta said in November that it was freezing its pension plan to reduce employee benefits costs.
Bank of America has been in cost-cutting mode for much of the past year, eliminating 7,000 jobs and selling off stakes in several lines of business. It recently launched a second expense cutting campaign through a program called "New BAC Two."