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Hershey Cutting Pensions

It will emphasize 401(k)s instead.

Hershey (HSY) - Get Hershey Company (HSY) Report became the latest big U.S. company to cut back on its defined benefit pension plan.

The Hershey, Pa., chocolate giant said it will close its traditional pension plan to new workers starting Jan. 1, 2007. The company said the new plan recognizes both age and service and provides future benefits at a reduced rate for current employees.

In response, the company said it will boost its 401(k) match. Hershey will match 75% of the first 6% of pay contributed by each employee.

Future retirement benefits for executives participating in the company's supplemental executive retirement plan will also be reduced to reflect reductions in the company's broader pension plan. This benefit will be redesigned as a defined contribution SERP for any future participants.

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The changes to retirement benefits protect employees' previously earned pension benefits and will not affect current retirees and terminated employees with a deferred pension benefit. The company has contributed nearly $800 million to its pension plans over the past five years and they are fully funded.

Hershey joins


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and many other big companies in cutting back on the defined-benefit plans in favor of so-called defined contribution plans such as 401(k)s.