Ford Cuts Benefits, Suspends Raises

Ford Motor Co. plans to eliminate merit-pay raises for its U.S. salaried workers and increases the amount of money retirees will pay for health-care benefits in an effort to reduce expenses.

Employees were informed of the changes Nov. 1 in a memo from Mark Fields, president-The Americas, Bloomberg reports.

Under the new plan, salaried workers will pay more toward monthly health-care contributions and pay higher deductibles, a Ford spokeswoman tells Bloomberg.

Salaried retirees and their spouses that are 65 years and older are eligible for $1,800 each for health-care expenses. Currently, Ford provides supplemental health-care insurance for anything not covered by Medicare. Retirees can use the $1,800 to purchase supplemental insurance, the spokeswoman says.

Additionally, Ford no longer will provide supplemental insurance for dependent children of retirees 65 and older.

Although salaried workers will not receive merit pay raises next year, Ford is reinstating matching contributions for 401(k) retirement plans. Ford now will pay 60 cents for each dollar employees contribute for the first 5% of their base pay. The auto maker had suspended reimbursements in July 2005.

All changes to insurance cutbacks and pay raises will take effect June 1.

Another change: Ford says employees will receive a paycheck on Dec. 29, the last business day in December, instead of Dec. 22, which was the practice in the past to help employees cover holiday expenses. The auto maker makes the change so it can postpone its payment of federal withholding taxes until January.