NEW YORK – 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.
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Companies including Sears Holding Co., NCR Corp., Circuit Stores Inc., and others have frozen pension plans for all or some of their employees during the past year.
Read about it here.
As the number of companies forfeiting on their pension obligations increases pressure will build for government intervention. This is building toward a huge political brouhaha. I wonder, is there a politician out there who sees an opportunity? You bet there is.
Stay tuned....
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