Pension disgrace
Posted by R. Neal
New pension rules may result in reduced benefits:
New pension rules may result in reduced benefits:
It may sound arcane, but a planned overhaul of the way companies keep their books on pensions and retiree health care plans could come at a very real cost to workers counting on those benefits.Under-funded pensions are a corporate scandal, and it's costing taxpayers billions to bailout abandoned plans. And conservatives want to phase out Social Security and let the "efficient markets" decide whether people live out their old age in poverty. It starting to appear that markets are only "efficient" when the government subsidizes them.
The changes — likely to begin by year's end — come as a growing number of companies freeze pensions and cut retiree health benefits, shifting risks and costs to workers. In recent weeks, IBM Corp. and Verizon Communications Inc. have joined the list of those announcing they will freeze their pension plans. On Monday, aluminum giant Alcoa announced it will no longer offer pension benefits to most U.S. salaried employees it hires beginning March 1.
But some experts say new regulations requiring companies to more accurately calculate and show the cost of their retirement promises could speed up the move by employers away from guaranteed pensions and other benefits.
"Changing accounting rules can cause companies to change their behavior," said David Zion, an accounting analyst with Credit Suisse First Boston.
Rules now in place give companies cover. Many have made expensive retirement promises without putting aside all the money needed to meet them. But they don't have to fully disclose the shortfalls in their earnings statements or on their balance sheets.
4 Comments:
Isn't social security an under-funded pension?
-SayUncle
It depends on whose math you believe.
IIRC, congress has a nasty habit of borrowing funds from it and replacing those funds with IOUs.
-SayUncle
Tell congress to enact a progressive agenda.
Browse http://www.boycott-republicans.com
Post a Comment
Return to Facing South's main page