3M is freezing pension plans for non-union U.S. employees at the end of 2028, the company announced Monday.
The cost-saving measure applies to 3M employees and those at the healthcare company, which is being spun off this year.
The Maplewood-based company began transitioning to 401(k) retirement plans in 2009, when it blocked new and rehires from accessing the U.S. retirement plan. 3M said it has fewer than 9,000 active participants in the pension plan.
By next year, 3M is expected to employ about 84,000 people worldwide, down about 8,500 from 2022 levels. The cuts are part of a broader restructuring aimed at shoring up the company's finances in the face of major legal settlements and challenges.
“This is an important decision for 3M as it helps position both companies for future success,” CEO Mike Roman said in a statement. “To help those affected, we are providing five years’ notice to ensure our employees can plan alternative strategies to meet their post-retirement income needs.”
According to the Congressional Research Service, only 15% of private sector workers have access to a pension or defined benefit plan, although this is still common in government jobs. Pension participation in the private sector peaked at 30 million in 1980 and is now at 12 million.
3M's move away from retirement planning follows rivals like General Electric, which made a similar announcement in 2019. This also concludes an achievement that was a major attraction for recruiting and retaining workers.
Retirement-eligible 3M employees will receive benefits through December 31, 2028. Former employees with vested benefits, retirees and annuitants are not affected by the suspension, 3M said.
Company officials did not say how much money would be saved by switching to defined contribution retirement plans, but instead focused on how 401(k) plans give employees “more flexibility and control when it comes to investing in their future.” .
3M forecast a long-term pension liability of $13.5 billion last year that was nearly fully funded. The company's annual pension costs have fallen in recent years; Pension expense for 2023 was $145 million. 3M had sales of more than $34 billion in 2022.
With 3M pledging billions to settle litigation over PFAS and earplugs — and soon set to lose a quarter of its revenue through a spinoff — some investors fear a dividend cut could be on the horizon.