Harleysville Group Inc. says it will be replacing traditional pension benefits with a more generous defined contribution retirement plan.
The Harleysville, Pa., property-casualty insurer is following in the footsteps of International Business Machines Corp., Armonk, N.Y., which announced a similar initiative earlier this month, by freezing its defined benefit pension plan and improving its 401(k) retirement savings plan.
The defined benefit plan freeze will take effect March 31.
The new 401(k) plan will offer an automatic core contribution equal to 5% of salary. Harleysville also will provide a guaranteed match equal to 50% of the first 6% of salary deferred by each employee.
If Harleysville does well, it will provide an additional match of up to 75% of the first 6% of salary deferred, the company says.
In addition, Harleysville will set a default 401(k) employee contribution rate of 3% of salary for all employees hired after April 1. Employees will have to take active steps to reduce the contribution rate.