Human Capital & Careers

Motorola’s Two-Tier Benefits

New hires at the electronics and cell-phone maker are no longer eligible to participate in Motorola's pension plan, in the company's supplemental r...
Stephen TaubMarch 25, 2005

Motorola is the latest company not to offer retirement benefits to new employees.

The electronics and cell-phone maker announced in its annual report that effective January 1, 2005, new hires are not eligible to participate in Motorola’s pension plan, in the company’s supplemental retirement benefits plan, or in its postretirement health-care plan.

That’s in keeping with the results of a December survey conducted by the Kaiser Family Foundation and Hewitt Associates. In 2004, according to survey respondents, 8 percent of companies eliminated subsidized health benefits for future retirees. Another 11 percent said they were likely to do so, although most of those benefit cuts were expected to affect new hires only.

Motorola’s decision also brings to mind last fall’s announcement by International Business Machines Corp. to no longer offer its pension plan to new employees. New hires at IBM are now offered an expanded version of the company’s 401(k) plan.

That’s also the case at Motorola, where new recruits will be able to participate in a 401(k) that offers a “more attractive” company match, spokeswoman Jennifer Weyrauch told the Chicago Tribune. Weyrauch added that Motorola considered the practices at its competitors before making the benefits changes, which she said were for “overall cost savings.”