Foamex International Inc announced that it will freeze future benefit accruals under its defined benefit pension plan, and preserve all existing earned benefits, as of December 31, 2007.
At the same time, the Company announced that effective January 1, 2008, it will increase its matching contributions to its 401(k) Savings Plan and adopt the Internal Revenue Service safe-harbor formula by matching 100% of the first 3% of contributions by its employees, and 50% of the next 2% of employee contributions.
“These changes allow us to continue to provide a competitive compensation package, which will be effective in recruiting and retaining employees, and give us more predictable retirement plan costs,” said Jack Johnson, President and Chief Executive Officer.
As a result of the changes, the Company expects to reduce the cash outlay associated with its retirement programs by between approximately $5.6 million and $10.8 million over the next four years, and reduce retirement program expense by between approximately $8.1 million and $13.3 million over the same period.
The actual savings realized by Foamex will be determined by market returns and conditions as well as employee participation levels in the enhanced 401(k) Savings Plan.
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