US Pension Shift (elimination)

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The big chill

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Janet Novackhttps://teakdoor.com/images/smilies1/You_Rock_Emoticon.gifUpdated: 10:51 a.m. PT Dec 4, 2006
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New economy companies — companies like Google or Cisco — don't offer traditional defined benefit pensions, the kind where you get your gold watch and your former employer pays you a fixed stipend for life. Old Economy companies like General Motors and DuPont do pay them. As of year-end 2005, 627 of the nation's largest 1,000 corporations still sponsored defined benefit plans. So if you are a graying middle manager at an old blue chip and participate in one of these plans, you're all set, right?



Not quite. Employers have the right to freeze defined benefit plans.
And when a plan is frozen, considerable damage is done to someone who has spent most of a career at one company but is 10 to 15 years away from retirement. You'd be astonished how little of the value of a defined benefit builds up in the first 25 years of your career. If you haven't already, you should figure out just what you'll be left with if your employer freezes your plan.


The risk is tangible. Eighteen percent of the 1,000 big companies with defined benefit plans had, as of last December, frozen at least one of their plans, with the majority of those freezes occurring in 2004 or 2005, according to consultants Watson Wyatt Worldwide. Another survey, by sei Global Institutional Group, recently found the freezes more extensive when midsize companies are factored in. This poll of 139 pension sponsors (both large and midsize businesses) showed that 40 percent had frozen or closed their plans, up from 30 percent in January.

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Link and Entire: http://www.msnbc.msn.com/id/15940405/



Discuss.

[quote=Milkman;224028]

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The big chill

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Janet Novackhttps://teakdoor.com/images/smilies1/You_Rock_Emoticon.gifUpdated: 10:51 a.m. PT Dec 4, 2006



New economy companies — companies like Google or Cisco — don't offer traditional defined benefit pensions, the kind where you get your gold watch and your former employer pays you a fixed stipend for life. Old Economy companies like General Motors and DuPont do pay them. As of year-end 2005, 627 of the nation's largest 1,000 corporations still sponsored defined benefit plans. So if you are a graying middle manager at an old blue chip and participate in one of these plans, you're all set, right?



Not quite. Employers have the right to freeze defined benefit plans.
And when a plan is frozen, considerable damage is done to someone who has spent most of a career at one company but is 10 to 15 years away from retirement. You'd be astonished how little of the value of a defined benefit builds up in the first 25 years of your career. If you haven't already, you should figure out just what you'll be left with if your employer freezes your plan.


The risk is tangible. Eighteen percent of the 1,000 big companies with defined benefit plans had, as of last December, frozen at least one of their plans, with the majority of those freezes occurring in 2004 or 2005, according to consultants Watson Wyatt Worldwide. Another survey, by sei Global Institutional Group, recently found the freezes more extensive when midsize companies are factored in. This poll of 139 pension sponsors (both large and midsize businesses) showed that 40 percent had frozen or closed their plans, up from 30 percent in January.

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Link and Entire: Older workers face risk of pension freeze - Forbes.com - MSNBC.com


Discuss.