Anheuser-Busch to freeze pension, ask retirees to contribute more

St. Louis Business Journal - by Kelsey Volkmann

Anheuser-Busch plans to freeze its pension plan for salaried employees, eliminate retiree health coverage for new employees and ask retirees to contribute more to their health benefits.

The brewer said defined contribution plans, or 401(k)s, are preferred over defined benefit plans, or pension plans, “because they provide more predictable cash flows and expense for the company,” James Brickey, vice president of people, told salaried employees in an internal memo Wednesday.

“We will soon be bringing these retirement plans more in line with other businesses and with our global company,” he wrote. “The level of benefits will change to the 50th percentile of the U.S. market.”

The brewer will freeze its salaried pension plan Jan. 1, 2012, which means participants will no longer accrue benefits in the plan after that, according to the memo.

The current 401(k) match rate of 91.68 percent will continue for at least the remainder of calendar year 2009.

The company is also asking retirees to contribute more to their health benefits, which will no longer be offered to workers hired Jan. 1, 2010, or after.

“Less than half of all large companies our size in the United States offer any type of retiree health care. Of those that do, the cost-share is substantially higher than what our retirees currently pay,” Brickey wrote. “Therefore, the health care cost-share for salaried retirees under age 65 will increase from 40 percent to 50 percent in 2010 and to 60 percent in 2011 … The cost-share for retirees age 65 and older will increase 10% points per year (from 40% today) until 2015 when this company-provided supplement to Medicare will be phased out.”

In a time when many other companies are freezing or cutting salaries, A-B said it still plans to give raises but plans to focus more on “meritocracy” to determine who gets them. About 40 percent of salaried employees will receive increases via this April cycle, the company said.

“We have an increased focus on meritocracy as we better link compensation to performance. With this comes a philosophy of managing pay at 80 to 100 percent of the position’s market rate, and any increases above that require special justification and approvals,” Brickey wrote. “This mindset supports increased differentiation based on performance. This is good news for the high performers in our organization below 80 to 100 percent of the range, who in the past, might have seen fewer rewards as dollars were spread more evenly among all employees.”

Brickey acknowledged that many A-B employees have taken on increased responsibility following the company’s reduction in work force.

“The changes … while influenced by the current economic environment, are largely geared to align A-B’s total rewards programs with the total rewards philosophy and culture of our global company,” he wrote.

St. Louis-based Anheuser-Busch is now a subsidiary of Belgium-based Anheuser-Busch InBev.

kvolkmann@bizjournals.com

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