Is Your Pension Plan Retiring Before You?
Even healthy companies are freezing or eliminating
traditional pensions. Here's how to figure out if it could happen where
you work
Business Week, April 21st, 2006
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If you're still depending on a traditional pension, it's time to put
yourself on a "pension watch." In the last few months, IBM (
IBM), Unisys (
UIS), Verizon (
VZ), and General Motors (
GM), among others, have announced that they're freezing their traditional "defined benefit" pension plans.
The Pension Benefit Guaranty Corp. (PBGC), an agency
created by the federal government to pay pensions to employees of
companies whose plans have terminated, explains that there are several
ways to freeze a plan -- by closing it to new entrants, freezing
benefits for only some of the employees, or in the case of a "hard
freeze," halting accrual of pension benefits based on either job tenure
or salary increases.
But any way you look at it, freezes, plus
actual pension plan terminations that occur when companies merge or go
out of business, pose a threat to the expectation that millions of
future retirees will be able to count on receiving some or all of the
guaranteed pension that they expected.
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