Dear HR,

Dear Mr. McCormick,

Thank you for your question. While McCormick hasn’t directly stated that they’ll freeze their pension, it's not out of the realm of possibility. Companies like Verizon were able to save $3 billion dollars from their pension freeze and switch to an enhanced 401(k) plan.

This switch from Defined-Benefit (DB) plans to Defined-Contribution (DC) plans has become a growing trend, as about two-thirds of the companies that had a DB plan in 1983 have switched to a DC plan. Most recently big companies like General Electric and Lockheed Martin have switched to a DC plan as it prevents their pension plans from accruing new benefits with growing salaries and it pushes the risk away from the company and onto workers.

The shift between the two plans has made many investors very happy, since switching to a DC plan allows companies to become less risky investments by lessening their debt. However, these switches really hurt employees who rely on receiving a pension for retirement, especially those that are in the mid to late portion of their careers.

These pension freezes have become a proven strategy to cut costs for corporations, and while McCormick has not frozen their pension yet, it is a strategy that they could implement in the future. So, in the case that McCormick does freeze their pension, it’s best to be prepared and talk to your HR department for estimates on your pension benefits, monthly payouts, and payout for a spouse if you were to pass away.

-Sincerely, HR