This excerpt taken from the MWV 8-K filed Oct 31, 2006.
MeadWestvaco Updates U.S. Pension Plan
Richmond, VA, October 30, 2006 MeadWestvaco Corporation (NYSE: MWV) today announced it will update its U.S. defined benefit pension plan covering salaried and non-union hourly employees; some of the changes to the plan will take effect January 1, 2007. The company is adding a cash balance formula within its existing retirement plan, which will provide eligible employees with a lump sum distribution of vested pension plan benefits upon termination of employment. These changes are being made to provide employees with a more portable and flexible retirement program that grows at a stable and predictable rate.
According to the new cash balance formula, eligible employees will receive an annual contribution from the company at a specific percentage of eligible pay based on an employees combined age and years of service that grows at a guaranteed rate of interest until retirement or termination of employment. Beginning January 1, 2007, all new employees will accrue benefits under the new cash balance formula. Current employees will transition to the new cash balance formula on January 1, 2008, and those age 40 and over will have the option to remain in the current pension formula or transition to the new formula. The changes do not affect MeadWestvacos current U.S. retirees, former employees with vested benefits or employees who retire prior to December 31, 2007.
MeadWestvaco has been listening to its employees and carefully researching retirement planning trends to determine the best possible defined benefit program, said Linda V. Schreiner, senior vice president, MeadWestvaco. As our company has changed over the years to focus more intently on developing innovative consumer packaging solutions, so in turn has our workforce. The implementation of this new cash balance formula provides more options to employees, while ensuring that MeadWestvaco continues to provide outstanding retirement benefits for our employees.
MeadWestvaco will provide educational materials and training for employees over the next several months to answer all questions prior to the shift to the new cash balance formula taking effect in 2008. All benefits accrued under the current final average pay formula will not change.