3M announced Monday that it will freeze retirement plans for non-union U.S. employees at the end of 2028.
The cost-saving move applies to 3M employees and those at the healthcare company it is launching this year.
“This is an important decision for 3M because it helps set both companies up for future success,” 3M CEO Mike Roman said in a statement. “To help those affected, we provide five years advance notice to ensure our employees can plan alternative strategies to meet their post-retirement income needs.”
The Maplewood-based company began moving toward 401(k) retirement plans in 2009 when it cut off access to the American Pension Plan for new and returning employees. 3M did not immediately respond to questions about the number of employees affected.
While this is still common in government jobs, only 15% of private sector workers have a pension or defined benefit plan, according to the Congressional Research Service. Private sector pension participation peaked at 30 million in 1980, and now stands at 12 million.
3M’s move away from pensions follows peers like General Electric, which made a similar announcement in 2019. It also closes the book on a benefit that has been a big draw for workforce recruitment and retention.
3M employees who are eligible for the pension will receive benefits through Dec. 31, 2028. 3M said former employees with earned benefits, retirees and those receiving pension payments will not be affected by the freeze.
Company officials did not say how much money switching to defined contribution retirement plans would save.
3M expected a long-term retirement benefit obligation of $13.5 billion as of last year, which was almost fully funded. The company’s annual pension costs have declined in recent years. Retirement expenses for 2023 were $145 million.
At a time when 3M has pledged billions of dollars to settle lawsuits related to PFAS and earplugs — and will soon lose a quarter of its revenue in a subsidiary operation — some investors fear a dividend cut is on the horizon.