The gold watch once given to veteran employees will soon become a thing of the past at
Starting in 2008, Citigroup will no longer contribute to its cash balance pension plan and instead use the funds to "enhance" its employee 401(k) retirement plans, it said in an internal memo Friday. However, the pension plan will not be closed entirely and participants will still earn interest edits until a distribution is taken.
In addition, stock awards made under the Citigroup Ownership Program will be ceased beginning in June, the company says.
The financial giant says that employees will have the opportunity to earn an additional 8% from matched contributions, compared to the 3% currently.
The New York financial services conglomerate has been struggling to reign in expenses as the company has invested in its international business, but also at a time when a difficult banking environment has strained operating margins at many banks.
The change affects about 150,000 of Citi's U.S. employees, it says. In the memo, the bank cited feedback from employee surveys requesting more competitive benefits.
"We will invest significantly more in our employees under this improved approach to our retirement savings," says Charles Prince, Citi's chairman and CEO, in the memo.
Shares of Citi closed down 15 cents at $49.59.