3M is freezing pension plans for non-union U.S. employees at the end of 2028, the company announced Monday.
The cost-saving move applies to 3M employees and those at the health care company it is spinning off this year.
The Maplewood-based company started moving toward 401(k) retirement plans in 2009 when it cut off access to the U.S. pension plan for new hires and rehires. 3M said it has fewer than 9,000 active participants in the pension plan.
By next year, 3M is expected to have about 84,000 employees worldwide, a reduction of about 8,500 compared to 2022 levels. The cuts are a part of a broader reorganization meant to shore up corporate finances amid large legal settlements and challenges.
“This is an important decision for 3M as it helps to set up both companies for future success,” CEO Mike Roman said in a statement. “To help those impacted, we are providing five years of advance notice to ensure our employees can plan alternative strategies to meet their post-retirement income needs.”
While still common in government jobs, just 15% of private-sector workers have access to a pension or defined-benefit plan, according to the Congressional Research Service. Pension participation in the private sector peaked at 30 million in 1980 and now numbers 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 had been a big draw for workforce recruitment and retention.
Pension-eligible 3M employees will accrue benefits until Dec. 31, 2028. Former employees with vested benefits, retirees and those receiving pension annuity payments are not impacted by the freeze, 3M said.
Company officials did not say how much money the switch to defined-contribution retirement plans would save but instead focused on how 401(k) plans give employees “more flexibility and control when it comes to investing in their future.”
3M projected a long-term pension benefit obligation of $13.5 billion as of last year, which was nearly fully funded. The company’s annual pension costs have been declining in recent years; the 2023 pension expense was $145 million. 3M had more than $34 billion in revenue in 2022.
As 3M has pledged billions to settle litigation over PFAS and earplugs — and will soon shed a quarter of its revenue in a spinoff — some investors fear a dividend cut could be on the horizon.