Strong Financial told its employees last week it is eliminating its 2004 pension plan contributions and ditching its matching contribution to employee 401(k) plans, amid a broad push to lessen costs at the heavily investigated firm.
The revelations, announced in a letter to employees last Tuesday, come as the firm continues to bleed assets. Investors have pulled $3 billion since the start of the scandal.
The 2004 pension contribution, which Strongs board of directors decided to eliminate, was to be paid in 2005. However, the firm said it will make its 2003 contribution at the end of the month.
"Its an unfortunate piece of news for the employees and is basically driven by the firm being in some difficulty because of what the top executive did," said Don Cassidy, senior analyst with Lipper. "I think the firm is in a position of trying to survive, whether that be independently or being acquired, but it is unfortunate for the innocent people.
"Obviously the firm is experiencing some serious declines in assets, and they are cutting costs accordingly," Cassidy added. "I suppose the employees would collectively rather lose some benefits than lose their jobs."