As Kodak Terminates Its Pension Plans, What Top Companies Still Offer This Retirement Perk?

We all know that Eastman Kodak (KODK) is in trouble. The iconic photography brand filed for bankruptcy protection in 2012, and has spent the last 13 years shedding businesses and performing a series of financial contortion acts to keep things up and running.

Kodak’s latest victim: its 97-year-old pension plan.

The company’s desperately trying to shore up $477 million worth of debt. To wipe the slate clean, Kodak has decided to terminate its pension plan over the coming months. The reversion will generate $500 million in cash after the company sells off investment assets, which should be enough to ensure Kodak stays afloat.

But what about the pension scheme’s 35,000 employees?

This is where it gets a bit complicated.

Existing plan participants will have to choose between settling through an annuity or taking a lump sum on their balance. At this stage,‌ retirees aren’t going to see a change in the value of benefits they’d been promised. In the meantime, Kodak’s still trying to work out what kind of pension it’ll introduce for new and current employees moving forward. 

Regardless of the type of scheme Kodak comes up with, this move is undeniably another nail in the coffin for the traditional pension plan.

To explain why, let’s pump the brakes and talk about what pension plans are. We’ll also cover what companies are still offering pensions, and why Kodak’s move to terminate its plan matters to all retirement savers.

What Are Pension Plans?

A pension plan is a popular retirement benefit. After you enroll in a pension plan, you or your employer starts contributing money into an investment fund that grows over time. This ensures you’ve still got a regular source of income after you stop working.

There are loads of different retirement products available on the market to help retirement savers plan for the future. But when people talk about pensions, they’re normally referring to a “defined benefit plan.”

Defined Benefit Plans

A defined benefit plan sees an employer invest in a retirement fund on your behalf. You’re then guaranteed a fixed annual income after you stop working. It also generally includes survivor benefits so your loved ones continue to receive payments after you die.

That fixed income rate has always been a hugely attractive option for workers. So, big corporations have been using defined benefit plans as an easy recruitment tool for decades.

Why are they great for workers? 

It doesn’t matter how much money you set aside throughout the course of your working life. You can relax knowing exactly how much money you will get from your pension when you retire. Your benefits will usually be paid in one lump sum, either in cash or in annuities. 

Best of all, your employer shoulders all the risk by putting money aside and guaranteeing a set income regardless of how the pension pot performs.

Unfortunately for workers, these plans are increasingly disappearing from the corporate world. U.S. Bureau of Labor statistics indicate only about 15% of private-sector employees now have a traditional pension plan.

Few companies are now willing to take on the heavy and long-term financial risks associated with defined benefit plans. Pension liabilities also go hand-in-hand with regulatory requirements and appear on corporate financial statements — which then go on to impact the company’s valuation.

As a result, a lot of U.S. companies have turned to “defined contribution” pension plans as a more sustainable alternative.

Defined Contribution Plans

A defined contribution plan is a pension product where both you and your employer contribute defined amounts to your future retirement fund. Your income after retirement is then based on the accumulated value of your contributions and the investment performance of your fund.

That means your retirement income isn’t fixed. As a result, you’ll face higher risk levels with a defined contribution plan than with a traditional defined benefit plan.

The most popular type of defined contribution plan is a 401k.

A 401k enables you to make pre-tax contributions, which will lower your taxable income over your working life. Some employers also vow to match your contributions, which offers a higher rate of retirement income for the future.

Alternative defined contribution plans include:

• 403b plans (popular choice for public schools and universities)
• 457b plans (popular choice for state and local government)

Some employers also offer profit-sharing plans. These plans see your employer make discretionary fund contributions that are linked to company profits.

What Companies Still Offer Pension Plans?

Defined contribution plans are still a smart way for workers to save for the future, and they’re certainly better than nothing. But if you’re on the hunt for greater certainty and less risk, a traditional pension plan is still the best option.

Fortunately, defined benefit plans haven’t gone the way of the dodo just yet. There are still some major global companies operating in the US that offer traditional pension plans. 

This includes:

• Pfizer (PFE)
• Merck & Company (MRK)
• John Deere (DE)
• Prudential (PRU)
• Ford (F)
• Mayo Clinic
• AT&T (T)
• Charles Schwab (SCHW) 

Other big names like JPMorgan Chase (JPM) and Boeing (BA) offer defined benefit plans that are still running but are closed to new employees.

This list is by no means exhaustive. But it should give you an idea of just how many big employers are still offering defined benefit plans. Traditional pension plans are no longer the norm, but they’re out there.

Why the Kodak News Matters for Retirement Savers 

Don’t work over at Kodak? Chances are you’re not too worried about the dismantling of Kodak’s ancient pension scheme.

However, you might want to pay more attention. There’s a very real chance this will affect all of us in the long term.

It goes without saying that big corporations are going to be watching Kodak’s move with great interest. If Kodak does successfully manage to cash out and repay their debts without totally ruining the lives of its 35,000 plan participants, it creates a blueprint for other companies shouldering costly and overfunded traditional pension plans.

As a result, that list of big corporations still offering defined benefit schemes may start to shrink in 2026. And a shift away from traditional pensions ultimately means higher levels of risk and a shrinking source of guaranteed income for large swathes of U.S. retirement savers.

Translation: keep your ears to the ground and make sure you understand exactly what your existing pension arrangements look like. There could be change on the horizon, and you’ve got to be aware of the retirement options available to you.