Goodyear plans to freeze its defined benefit(DB)plans next year and replace them with enhanced 401(k)accounts.
The company will also increase the amounts that current and future salaried retirees contribute toward the cost of their medical benefits, redesign retiree medical benefit plans to minimize cost impact on premiums, close its Medicare supplement plan to new entrants, and discontinue company-paid life insurance for salaried retirees.
Goodyear joins a number of firms, such as Sears Canada, Hershey, DuPont, and Nortel that are making the switch from DB to defined contribution(DC)plans.
As a result of the changes, Goodyear expects after-tax savings of US$80 million to $90 million in 2007, $100 million to $110 million in 2008, and $80 million to $90 million in 2009 and beyond.
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