Friday, June 23, 2006

Are Pensions Going -- Going -- Gone?

'Mornin', Ya'll...
Cassandra here.

This post is in the "old news" category. But since yet another big media type is still trying to get people to pay attention, I guess I should join in. Because they are constrained by professional standards professional journalists are not able to come right out and say plainly what I can say as a blogger, so here it is:

Defined benefits pension plans are not just endangered, they are already "dead men walking." It's just a matter of time until they are killed off altogether.

Those of us whose companies have already shed those old plans and are being compensated by Pension Benefits Guaranty Trust are presumably out of the weeds. But anyone whose pension plan status is still out there in the wonderful world we call the marketplace is as vulnerable as a deer in the headlights to being T-boned by the harsh realities of market economics.

"There's not an organization I know of that hasn't had discussions about its defined-benefit plan in the past year or won't be having them in the coming year," says Alan Glickstein of the Watson Wyatt consulting firm. At some firms that discussion is epochal. "Some of these plans have not been looked at fundamentally since World War II," he says.
It's all happening so fast that many people, especially today's workers, still haven't caught up to the new reality. (Believe it or not.) Only 21 percent of U.S. workers participate in defined-benefit plans, says the Bureau of Labor Statistics. Yet an incredible 61 percent expect to receive benefits from such a plan in retirement, according to recent research from the Employee Benefit Research Institute.

I have been talking about this trend since I started blogging. As they say, been there, done that. That's why I get so exercised at the idea of messing with Social Security. All this puzzles together with Medicare and Medicaid, incidentally, as policy-makers try to figure out how to care for a swelling population of old people with no assets. It's all well and good to talk about the evils of "socialized medicine" but problems are piling up faster than solutions. That great golden calf we call Free Enterprise is finding ever more elaborate ways to stack profits higher than services and benefits (see Dr. Bob's enlightening series about what passes for insurance these days) .

This article is about as exciting as an information sheet with prescription drugs, but like that other fine print, you ignore it at your peril.

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