Certain retirement plans have seen a dramatic increase in "freezing assets." Freezing a retirement plan isn't where the federal government swoops in and stops all activity based on court orders. Freezing a retirement plan refers to restructuring a defined-benefits plan to stop accruals, reducing the long-term exposure of the company to pay benefits. A company can freeze a retirement asset in a few different ways.
Discuss with your company advisors, board of directors and tax consultants regarding the benefits of freezing a defined benefit pension plan. Evaluate what type of freeze is most beneficial for the company. A freeze can stop all new employees from getting any pension benefits but may still allow existing employees to accrue benefits. Another form of a freeze may stop all future pension credit for all employees. Some plans allow some employees who are fully vested to receive 100% of benefits accrued to that point but don't allow further accrual of new benefits.
Vote to approve the freeze and the details of how the freeze affects employees.
Obtain union consent of the freeze if your employees are covered under a labor union agreement.
Send notification to every employee regarding the change in employee benefits and how it affects their retirement benefits. This is a good time to inform employees of any new retirement programs such as a 401(k) plan that will be offered instead. This notification must happen prior to the change occurring though there is no minimum required time frame.
Notify the pension administrator regarding the freeze in writing.