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Liberty Mutual is cutting back contributions to retirement plans and other benefits for its employees, just a year after a public uproar over lavish pay and perks for top executives of the Boston insurer.
Under the new plan, the company will reduce the maximum dollar amount it provides to match workers’ savings in their 401(k) plans to 6 percent from 7 percent. It also will switch from a traditional pension plan to a cash-balance format that saves the company money. Insurance coverage for retirees is also being trimmed.
The cuts come on the heels of the retirement of former chief executive Edmund F. “Ted” Kelly, who earned $200 million over a four-year period, making him one of the nation’s highest-paid executives. Kelly is receiving an annual pension of about $3.3 million, according to prior Globe reports.
The move to scale back on contributions to employees’ 401(k) plans appears to buck national trends. Many companies trimmed or halted 401(k) matches during the financial downturn but restored them as the economy improved.
In a brochure explaining the changes to employees, Liberty Mutual says its current retirement benefits “are not in line with market practice’’ when compared to 25 financial companies in its peer group.
Mark Touhey, manager of compensation and benefits at Liberty Mutual, acknowledged some may “try to connect” the benefits cuts for rank-and-file employees and criticism over pay for the company’s top executives.
“I think anyone’s individual reaction will be unique,” Touhey said.