Study: More Companies Terminate Pensions

[lovuian]

http://feeds.bignewsnetwork.com/redir.php?jid=093c4ac6ff5f716c&cat=3a8a80d6f705f8cc

Jun 22, 4:49 PM EDT

Study: More Companies Terminate Pensions

By ADAM GELLER
AP Business Writer

NEW YORK (AP) -- Big employers sharply accelerated freezes and terminations of pension plans last year, steering away from the increasing expense and uncertainty of paying for workers' retirement, a new study says.

About 11 percent of the big companies offering traditional pensions terminated their plans or froze accrual of new benefits to workers, according to a study by consulting firm Watson Wyatt Worldwide, released Wednesday. That is up from 2003, when 7 percent of the nation's 1,000 largest companies capped pension plans.

That trend, long in the making, has continued into this year, most notably with UAL Corp.'s United Airlines defaulting on its severely underfunded pension plans. Whether it continues could hinge on how lawmakers resolve a number of difficult questions swirling around pensions, experts say.

About half of the companies that froze pension accruals or terminated plans last year are financially troubled businesses, the study found.

But even many healthy companies are rethinking pensions, partly because of the uncertain legal status of some pension plans. Many companies that, for years, were able to get by making minimal contributions to their pension plans are now faced with massive increases in required payments. Congress is debating whether to jack up the premiums companies pay the federal government to insure their pension plans.

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The day of the pension is over!!! No pensions and no medical insurance these will have to be replaced by the government!!!

[mbperrin]

1. And I just KNOW those fatcats took the first cuts themselves,

right?

[Yupster]

2. Pensions are going to be a thing of the past

Defined Benefit plans just don't make economic sense for companies.

A company needs to decide what it's in business to do.

Is GM in business to make cars?

Then why does it pay a whole department of people to do nothing but change addresses of retirees, process name changes of retirees who get married, collect hundreds of returned checks each month and try to track down where people moved to, and process death claims?

It just doesn't make sense trying to keep up with why Mrs Johnson didn't get her check last month when Mrs Johnson hasn't worked there for 20 years.

It makes much more sense to have a Defined Contribution plan (401k), (403B), SEP or Simple IRA. That way when the person leaves your company, you shake his hand, give him his money to roll into an IRA, wish him well, and get back to making cars.

In the future, the only jobs which will have defeined benefit plans will be with the government.

[saigon68]

3. True

And the great unwashed will beg on the streets for food, like they do in Karachi, Bombay and Washington D.C.

The only change will be they will number in the millions.

[ret5hd]

5. Why? ...

because that is the agreement that GM made with those ex-employees way long before they were EX.

that's the agreement THEY made...that's the promise THEY made...that's the responsibility THEY accepted. the workers kept their end of the deal...why not gm?

those pensions are DEFERRED EARNINGS. the retirees have already EARNED that pay. they accepted LESS PAY over their careers so that they and their dependants would be guaranteed something in their old age. that was the agreement they made...and they kept their end of the deal.

[Erika]

4. Corporatism will rule

Bush set the stage. Warehousing of the old and poor with medical costs paid by the taxpayers. Here we come, third world.