Our Terms of Service and Privacy Policy have changed.

By continuing to use this site, you are agreeing to the new Privacy Policy and Terms of Service.

Wal-Mart overhauls 1.4 million workers' benefits

By Parija Kavilanz, senior writer


NEW YORK (CNNMoney.com) -- Wal-Mart Stores, the largest private sector employer in the country, announced major changes to retirement, medical and profit-sharing benefits it offers its 1.4 million workers.

As part of the benefits overhaul, Wal-Mart is switching its 401(k) plan to a more "contemporary plan" that matches employee contributions. The company is also introducing new health plans to which Wal-Mart will contribute a maximum of $1,000 toward an employee's health care expenses.

The changes were conveyed to employees in a memo ahead of the company's annual open enrollment that kicks off this week.

With its previous retirement plan established in 1971, the company would share its profits with employees by automatically putting company money -- the equivalent of 4% of an employee's pay -- into a retirement plan. The employee wouldn't be required to contribute.

With the new plan, employees will have to contribute into the newly formed 401(k) plan beginning Feb. 1 2011. Wal-Mart will then match employee contributions up to a maximum of 6% of pay.

"If an associate contributes 6%, and the company matches it 6%, that's 12% of an associate's income that's in the plan for their future," said Wal-Mart spokesman David Tovar.

Regarding their health plan next year, Tovar said the vast majority of employees will see cost increases of about $4 per pay period beginning next year.

Wal-Mart is introducing plans that offer Health Reimbursement Accounts (HRA) to which the company will contribute a maximum of $1,000 to pay for medical expenses before a deductible or coinsurance kicks in.

Lastly, Tovar said the company is retooling its bonus incentive program whereby hourly workers will have the potential to receive additional quarterly bonuses based on their store's performance.

"Many people are struggling with the economy," said Tovar. "With health care costs rising, we're trying to create plans for our associates that help them save for the future, give them more cash now and give them health plans that meet their needs."

Tovar said Wal-Mart did factor in overall rising health care costs while making the changes but he declined to say whether the changes would also help the company save money. To top of page

Index Last Change % Change
Dow 16,102.38 -272.38 -1.66%
Nasdaq 4,683.92 -49.58 -1.05%
S&P 500 1,921.22 -29.91 -1.53%
Treasuries 2.13 -0.04 -1.85%
Data as of 10:27am ET
Company Price Change % Change
Bank of America Corp... 15.65 -0.29 -1.82%
Apple Inc 109.27 -1.10 -1.00%
Alcoa Inc 9.49 -0.08 -0.84%
Microsoft Corp 42.61 -0.89 -2.05%
General Electric Co 24.00 -0.51 -2.08%
Data as of Sep 4
Sponsors

Sections

Jessica Alba's Honest Company has been sued by a customer who claims the company is making false claims in its marketing and labeling. More

The Obama economy was supposed to be a selling point for Democrats. But China is rising fears of a global slowdown. More

Google has released Chrome 45, which claims to make your browser faster and give your laptop battery extra life. More

Harlem's Hot Bread Kitchen teaches kitchen skills to low-income immigrant so they can find employment. More

Pimco's famous fund once managed by star manager Bill Gross has less than $100 billion in management for the first time since 2007. More