Xerium Technologies Freezes Pension Plan, Cuts Retiree Health Care Benefits

Youngsville, North Carolina-based Xerium Technologies Inc., a manufacturer of products used in the production of paper, is freezing its defined-benefit pension plan for U.S. salaried and non-union hourly employees, enhancing its 401(k) plan and terminating its retiree health care benefits plan.

Effective January 1, 2009, employees no longer will earn benefits under the defined-benefit plan. However, Xerium will enhance its 401(k) plan, matching 100 percent of employees salary deferrals up to 6 percent of pay. The company now matches 100 percent of deferrals on the first 4 percent of pay.

Xerium says it is freezing its defined-benefit program because of “increasingly stringent pension regulations (that are) expected over the next several years to lead to prohibitively expensive costs of maintaining defined-benefit plans,” according to a filing with the Securities and Exchange Commission.

In the filing, Xerium, which reported a loss of $150.2 million on 2007 revenue of $615.4 million, attributed the termination of retiree health care coverage to the increased cost of medical insurance and claims.

As a result of the freezing of its pension program and the elimination of retiree health care coverage, Xerium expects to reduce those liabilities by about $35 million.

Xerium’s pension program at year-end 2007 had $132.7 million in liabilities and $69.5 million in assets. Its retiree health care benefits program is unfunded.

Filed by Jerry Geisel of Business Insurance, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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