“Heard Off the Street: The pension time bomb may explode, or perhaps it’s just a dud“: the Pittsburgh Post-Gazette reports. The article gives a good summary of PBGC Executive Director Steven A. Kandarian’s testimony before a congressional committee last week that outlined why the PBGC is in such bad shape:
Active workers account for 53 percent of those insured by the PBGC, down from 78 percent in 1980;Companies in the most mature, capital intensive industries that have the toughest time funding plans also have huge numbers of older workers and retirees;
People are living longer in retirement: 18.1 years for the average male today, vs. 11.5 years in 1950;
Pension funding rules prevent companies from increasing contributions when they can afford to and don’t require weak companies to fund underfunded plans.
If you would like to learn more about the U.K.’s pension system and the problems they are struggling with, read “Don’t bumble in pensions jungle” at the Liverpool Echo. The article states that “few aspects of the financial world are so confusing and jargon-ridden as pensions” but that “[d]espite the uncertainty one thing is true, however – a struggling pension is better than no pension at all.”
“The Benefits Buffet: By picking wisely, workers can save money and keep their budget healthy“: Mark Schwanhausser for the Mercury News via Yahoo! News reports. The article notes an ugly prediction for 2004 for most workers: “Your pay will remain flat, but your health-care bills will rise. Somehow, you must squeeze several hundred dollars from your budget just to break even.” Employees are counseled to work hard at examining their benefits packages and to make wise decisions about choosing the benefits that are right for them, even though trying to decide what to choose is likened to eating an elephant.
The Associated Press for the Washington Post has a good article on how companies are helping employees plan for retirement: “Companies Helping Workers Plan Retirement.” The article reports that at “Ernst & Young, requests for proposals to design and run retirement planning programs for companies are about 20 percent higher this year, compared with typical annual increases of 2 percent to 3 percent over the past decade.”
On a related subject, PlanSponsor.com has an article entitled “Schwab Offers Participants Free Advice“, discussing how Schwab Retirement Plan Services has announced that “participants in plans serviced by Schwab Retirement Plan Services will now have access to customized advice either online, by phone, or in person – including specific recommendations among the core investment fund choices available in a retirement plan – courtesy of an arrangement with San Jose, California-based GuidedChoice.” According to the article, Schwab is providing the Guided Choice tool for free.
Mark Davis for the Kansas City Star reports: “Companies free employees to sell stock.” The article notes that many companies have “unlocked” their employees 401(k) stock accounts permitting them to sell their company stock and invest the money elsewhere, but that employees are not taking advantage of the flexibility as much as would be expected in light of the Enron and WorldCom disasters. The article looks into why employees are not diversifying. The most compelling reason (IMHO) is found in this statement: “Everybody’s dreaming about the company’s stock exploding like it did five years ago.” Unfortunately, the article predicts that “[t]hat’s just not going to happen.”