The latest issue of Fortune magazine says employees counting on company pensions to help fund their retirements may be in for a rude awakening when corporations renege on their commitments and slash pensions benefits by as much as half.
It reports the pension plans of the largest American corporations no longer have enough money set aside to pay the more than one trillion dollars in benefits owing to their current and future retirees. Companies calculate their future obligations on the basis of actuarial projections of the revenue they expect their plans’ bond and equity holdings to generate over time. But the stock market and interest rate plunge have played havoc with these projections, and instead of meeting the shortfall – an estimated $240 billion and growing – from profits, as required by law, companies are slashing benefits and employing creative accounting and auditing techniques to disguise future liabilities.
The article describes the accounting subterfuges and regulatory changes which are allowing companies to cut the promised retirement income of US workers, but, as many of you know, the same pension shortfalls and management evasions characterize private and public sector plans in all of the OECD countries, the effects of which are certain to be felt over the coming decades.
You can access the site directly, or I've posted the article on www.supportingfacts.com. Apologies for any cross posting.
MG