Carpenter Technology Corporationtoday announced changes to retirement plans it offers to certain employees
OREANDA-NEWS. Carpenter Technology Corporation (NYSE:CRS) (the “Company”) today announced changes to retirement plans it offers to certain employees. The Company will freeze benefits accrued to eligible participants of the General Retirement Plan (“GRP”) effective December 31, 2016. The GRP is a defined benefit pension plan that currently includes approximately 1,900 domestic current salaried and hourly employees. The affected employees will be transitioned to the Company’s 401(k) plan that has been in effect for eligible employees since 2012, when the GRP was closed to new entrants.
The Company also announced plans to voluntarily contribute $100 million to the GRP within the next 60 days, which will further bolster the funded position of the plan.
As a result of these changes, the Company expects an approximately $40-45 million reduction in its annual net pension expense inclusive of estimated incremental defined contribution plan costs. The savings estimates are based on assumptions used in the Company’s June 30, 2016 valuation and are subject to change as the Company completes a re-measurement of the plan’s assets and liabilities as of September 30, 2016. The Company also expects to record certain non-cash charges related to the change of an amount less than $1 million.
“During the past year, we launched numerous initiatives to aggressively manage our business and promote sustainability in the face of ongoing marketplace volatility across select end-use markets. To further strengthen our long-term financial condition and remain competitive in today’s marketplace, we are modifying our approach to how we partner with employees to help them prepare for retirement,” said Tony Thene, Carpenter's President and CEO. “Our decision to transition from a traditional defined benefit pension plan to a more typical defined contribution plan reflects our goal to provide our employees a competitive retirement plan option while aligning the majority of our workforce under a common retirement plan. At the same time, our $100 million voluntary contribution to the GRP underlines our commitment to supporting our many loyal employees who have contributed to Carpenter’s success and leadership position.”
In connection with these actions, the Company has updated its forward looking guidance for fiscal year 2017 related to net pension expense and pension contributions. The Company now expects net pension expense for fiscal year 2017 to be approximately $39 million to $44 million and expects to make a discretionary pension contribution of $100 million during fiscal year 2017. The reduction in net pension expense excludes the expected incremental defined contribution plan costs of approximately $5 million in the second half of fiscal year 2017.
About Carpenter Technology
Carpenter Technology Corporation is a leading producer and distributor of premium specialty alloys, including titanium alloys, powder metals, stainless steels, alloy steels and tool steels. Carpenter’s high-performance materials and advanced process solutions are an integral part of critical applications used within the aerospace, transportation, medical and energy markets, among other markets. Building on its history of innovation, Carpenter’s superalloy powder technologies support a range of next-generation products and manufacturing techniques, including additive manufacturing or 3D Printing.