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AIG joins the corporate move away from defined-benefits, telling workers it's freezing its traditional pension plans, effective Jan. 1. The company has $5.7B in future obligations, and $4.1B in assets to pay out, meaning a current liability of $1.6B. It will instead focus on its boosting its 401(k) program by making larger annual contributions to employees' accounts.
- According to Towers Watson, just 20% of insurers and 6% of finance companies still offer traditional pensions for new hires vs. 82% and 57% 17 years ago.
- AIG's move came after discovering its spends more on employee-retirement programs than most peers, and that programs are not in line with where the marketplace is headed, says an HR executive at the company.
- Separately, AIG is scrapping a performance-review program put in place by former CEO Bob Benmosche who was trying to keep in the good graces of regulators and public opinion. "You've asked for a performance-management process that is better suited to the AIG of the future," CEO Peter Hancock tells employees.
- Source: WSJ