More good news for the paycheck class:
NEW YORK (Reuters) - DuPont Co. (DD) on Monday said it will sharply cut its pension plan for U.S. employees, reducing the amount it will contribute to workers’ pensions after 2007 by two-thirds.
The company said it will enhance its savings and investment plan for employees, making a contribution of 3 percent of each employee’s pay beginning in January 2008 and matching the first 6 percent of employees who contribute to the plan.
DuPont is among the first major U.S. companies to cut pensions after President George W. Bush signed into law new rules meant to overhaul the country’s pension system earlier this month. The move also follows an August ruling by a U.S. court that found that IBM (IBM) did not discriminate against older workers when it shifted to a new pension plan.
Defined corporate pensions have always been a joke. Even some local government ones are risky (can you say San Diego), because there is just too much opportunity for funny business. And if the Feds have to bail out a plan, it’s not at full value. Too many steel workers lost all when their companies went bankrupt.
So DuPont is offering a max of 9% with a 6% employee match - which is a very good deal. You’d be amazed at how fast this grows with compounding. Saving for retirement is a numbers game, the earlier you start the less you need to put in.