Kmart to Scrap Pension Plan in Favor of Profit Sharing : Retailing: Discounter has had disappointing earnings for eight consecutive quarters.

Kmart Corp. said Friday that it will scrap its pension plan in favor of a profit-sharing program in which employees will earn retirement benefits based on the retailer’s financial performance.

The discounter, which has had disappointing earnings for eight consecutive quarters, said it will record a one-time gain of about $100 million in the first quarter as a result of the new program.

Interim President Anthony N. Palizzi said the profit-sharing plan will create a new incentive for workers to help improve the company’s performance.

Kmart told its 290,000 domestic employees that as of Jan. 31, their pension plan will be frozen and no additional benefits will be earned. Vested benefits will be retained, however.

Under the new plan, Kmart will contribute $30 million a year to a profit-sharing fund. If its U.S. pretax profits exceed $750 million or 2.5% of sales, the contribution will be increased.

For 1995, eligible workers will earn benefits under the existing pension plan and the new profit-sharing program. The changes do not affect Kmart retirees and former employees who are vested in the pension plan.

Kmart has nearly 4,000 retail outlets in the United States, including Kmart, Builders Square and Borders Group stores.

Kmart shares closed up 37.5 cents at $15 on the New York Stock Exchange.