Zippo is joining other Fortune 500 companies across the country in moving away from pension plans and toward defined contribution plans, an official reported this week.
The move that goes into effect May 15 impacts about two-third of the company’s employees.
“After several years of consideration, the Zippo board of directors have determined it necessary to make changes to the employee pension plan,” CFO Don Hall told The Era in a prepared statement on Wednesday.
Although the company and its pension plan are financially in good shape, he said the cost of the pension plan is aggressively rising, thanks partly to what he calls onerous government regulations. However, those vested in the plan will still receive retirements benefits accrued, he said.
“The pension plan’s total costs are increasingly unpredictable due to market conditions,” Hall said. “The costs of the new program will be much more predictable — allowing the company to have the ability to better plan investments in other areas of our business and ensure more stable growth over the long term.”
In fact, he pointed out that most U.S. employers –– more than 95 percent of the Fortune 500 –– are shifting away from pension plans and toward defined contribution plans, including 401(k) plans, which he said come with more advantages.
“Shifting the emphasis of our program from the pension plan to the 401(k) plan allows us to continue to provide valuable retirement benefits that compare with those offered by other companies of our size,” Hall said.
Zippo also recently made the news after 38 people were permanently laid off, a move attributed to a slowdown in business in North America and too much inventory for current demand in China. The layoff was based on seniority.
Zippo employees were also offered early retirement packages, and 19 voluntarily chose that option.
Zippo’s product line includes more than just standard lighters. The company offers lighter accessories, butane multi-purpose lighters, men’s and women’s fragrances, lifestyle accessories and items for outdoor enthusiasts.
Meanwhile, W.R. Case & Sons Cutlery Co., which is owned by Zippo, is rebounding following a rough stretch in 2016. In February, 12 employees were brought back to the company.