Lilly Tightens Retirement Benefits For Employees

More than 20,000 Lilly employees will have to pay a larger share of their health-care premiums when they retire, and some might wind up working longer than expected to earn their full pensions, The Indianapolis Star reports. The changes are designed to keep benefits plans sustainable for years to come, according to Lilly spokesman Phil Belt, who maintains the drugmaker, which has been shedding workers through attrition, is not using the changes to further reduce head count or to increase retirements.

The new benefits plan has three major elements. A defined-benefit pension plan remains, but the calculation for determining retirement benefits will change, and so an unspecified number of employees “will have to work a little longer” to get the same benefit provided under the current formula. Current retirees will see their share of health-care premium costs rise by 12 percentage points over six years, starting in 2009. Lilly will increase its contribution to its 401K, automatically matching employee contributions in the form of company stock, dollar-for-dollar, up to 6 percent of the employee’s income, subject to the federal ceiling of $15,500.