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

Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play

Search for Jobs

Index Last Change % Change
Dow 18,024.06 183.54 1.03%
Nasdaq 5,005.39 63.97 1.29%
S&P 500 2,108.29 22.78 1.09%
Treasuries 2.12 0.07 3.47%
Data as of 6:03am ET
Company Price Change % Change
Bank of America Corp... 16.11 0.18 1.13%
Apple Inc 128.95 3.80 3.04%
Alcoa Inc 14.15 0.73 5.44%
Microsoft Corp 48.66 0.02 0.03%
Chesapeake Energy Co... 16.54 0.77 4.88%
Data as of May 1
Sponsors

Sections

Aktarer Zaman was sued by United Airlines for his website Skiplagged.com, which helps people find cheap flight tickets. More

PredictifyMe uses data to predict the future. They tell Laurie Segall how many views, Facebook 'likes', and tweets this story will get. More

Limestone mines in the Midwest have been rehabilitated into commercial spaces with two big selling points: cheaper rent and lower energy bills. More

Most victims of workplace violence are women. Immigrants and Latinos are most likely to suffer fatal accidents at work. More