Thursday, June 23, 2005

Pension = Deferred Salary, People!

In the world of work, health insurance and pension benefits aren't given freely by employers out of the goodness of their hearts. The costs of insurance and pensions are the workplace equivalent of Wimpy's famous promise, "I'll gladly pay you Tuesday for a hamburger today."


A "pension plan" or "retirement plan" is an arrangement by which an employer (for example, a corporation, labor union, government agency) provides income to its employees after retirement. Pension plans are a form of "deferred compensation" and became popular in the United States during World War II, when wage freezes prohibited outright increases in workers' pay. LINK

The promise of health insurance coverage (or a portion of the cost) and the availability of future retirement funds is the price American workers pay for accepting salaries that don't (for the most part) allow most workers to control their own destinies. Owing your soul to the company's metaphorical "store" isn't far-fetched, when the company controls your access to health care and your retirement options until the day you die.

So, when I read that companies are "freezing" or eliminating pensions altogether, I shudder to think why no one (I mean, NO ONE) mentions that benefits are actually deferred salary.

For example...

Study: More Companies Terminate Pensions

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.

That could lead even more companies to abandon pensions. LINK

Of course, "even many healthy companies are rethinking pensions." If you were a high-powered CEO, and you wanted to guarantee your own multi-million dollar salary and healthy, inflation-safe investment returns for your major stockholders, you'd be considering new & improved ways to screw your workers, too!

All you have to do is make sure that no one ever mentions that "pension" is just another word for "deferred salary." Keeping workers stupid and scared is "job one" for fat cats!

Truly heavy, 16 ton sigh.


Anonymous Blue Cross of California said...

Great blog I hope we can work to build a better health care system. Health insurance is a major aspect to many.

2:45 AM  

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