Wal-Mart to Cut Profit Sharing, Increase Potential Retirement Benefits
Oct 9th 2010 1:30AM
Updated Oct 9th 2010 1:40AM
Wal-Mart Stores (WMT), the nation's largest private employer, plans to end automatic profit-sharing contributions for its employees in a revamp of its benefits package that it says will give workers more chance to share in its financial success.
The discounter will replace profit-sharing starting in February with retirement plan contributions of up to 6% of pay - as long as workers sign up and contribute an equal amount, Wal-Mart said in a memo it provided The Associated Press late Friday.
The payments added up to 4% to the compensation of employees who'd worked more than 13 months for the world's largest retailer.
Wal-Mart also is setting aside up to $1,000 for each employee's health care account to cover eligible medical expenses before employees have to pay any deductible coinsurance.
The memo also notes that employees have the "potential" to receive larger bonuses if the store, warehouse club or distribution center where they work performs well.
Pros and Cons of Profit Sharing
Wal-Mart started profit sharing in 1971. It has 1.4 million employees in the U.S. and annual revenue worldwide of about $400 billion, most from its U.S. stores.
Wal-Mart spokesman Dave Tovar said the new matching retirement contributions will "help associates grow their retirement savings much faster than before."
"Based on feedback from associates, we redesigned our plans to make them more contemporary, relevant and in line with what most companies already do," he added.
But Jennifer Stapleton, assistant director at the union-backed advocacy group WakeUpWalmart, saw eliminating profit-sharing as a cut in compensation.
"To demand that people who already make poverty-level wages begin to pay in order to receive any retirement benefits is out of touch with the reality of associates' lives," Stapleton said in a statement e-mailed to The AP.