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PepsiCo is axing its 401(k) contributions for some employees, a change that started in late January. The move comes as the company announced plans to lay off 8,700 workers and cut 100 of its 150 ad agencies in a bid to become more efficient.
- Read the HR memo below.
At the same time, PepsiCo reduced the money it puts by for “pension and retiree medical plan contributions” by $1.4 billion, according to its most recent cashflow statement. The company told us:
“We review our programs regularly to ensure we are providing market competitive benefits—from both the employee and company perspective. When compared to the market, PepsiCo’s retirement benefits remain above average.”
“PepsiCo continues to contribute to the retirement savings of all salaried employees and offers a highly competitive set of employee benefits.”
The 401(k) cut applies only to employees who also receive an old-fashioned “defined benefit pension plan.” Those employees will keep their 401(k)s, they just won’t also receive a matching contribution from PepsiCo.
In 2010, the company increased its post-retirement expenses by $1.7 billion, according to PEP’s most recent SEC disclosure (see page A-4). In 2011, however, with the cut to 401(k) benefits around the corner, PepsiCo only increased its post-retirement expenses by $349 million. The savings was about $1.4 billion.
Here’s the email Pepsi’s HR department sent its employees telling them their benefits are being reduced:
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