Pension Meltdown Continues - Verizon Joins In

This week we heard (once again) that misery loves company.

First the airlines (United, Delta) defaulted on their pension obligations to their employees, then the auto suppliers (Delphi) joined in. Now the telelphone companies are getting into the act.

Verizon announced 2 things this week: 1) it will not allow managers to build additional pension benefits and 2) it will contribute less to the health care benefits of managers when they retire. While the first will require employees to reconfigure how they save for retirement (easier if you're 35 rather than 55), the second is the real blow that will suck up a good chunk of retirement funds. (Read more.)

The Verizon deal is notable because unlike the airline and auto suppliers, the company is not in bankruptsy. In fact, Verizon 's self-assessment of Q3'05 results was that they had "a very strong quarter" which was very profitable. (Read more.)

The way has successfully been shown for all companies - pensions are new found money for corporate chiefs.

What does this mean for you? 1) If you can, take your pension with you when you leave the company. 2) Consider buying long-term health insurance if you don't have anyone to take care of you and are worried about your health. 3) Consider buying income annuities on the installment plan (read more).

Retirees Beware - Medical Benefits for Life Won't Be There

Have you taken or are you considering taking early retirement because your company is guaranteeing medical benefits for life?

Well, the story of Evo Alexandre should be instructive for you:

Evo Alexandre of Moraga California,72, took early retirement in 1986 from Kaiser Aluminum Corp. The company gave him an incentive: guaranteed medical insurance for life.
But 2 years ago Kaiser Aluminum, filed for bankruptcy and told salaried retirees like Alexandre that they would need to pay $130 per person per month to retain their benefits. They had no choice to go along. Then, on Jan. 1, 2004 Kaiser doubled the premium to $522 per couple per month. That comes to $6,300 per year. Two weeks later, the company asked a bankruptcy court to let it terminate medical benefits for all its retirees, salaried and nonsalaried alike, and it did so, effective May 31.

That's free to zip, zilch in less than 20 years. No health insurance.

What will retirees do if their company defaults on its promise? What can they do? Medicare will not help.

According to the Employee Benefits Research Institute, a Washington D.C. nonprofit, a person who is 55 today will need:

• $151,000 in cash to cover gaps in Medicare coverage if he/she lives til 80
• $330,000 in cash to cover gaps in Medicare coverage if he/she lives til 90
• $0.5 million dollars in cash to cover the gaps if he/she lives til 100

Before its too late:

1. lobby our irresponsible leaders to make health care insurance a national priority and explore ways to guarantee health insurance for all - if we can put a man on the moon, can't we have a hospital bed for him too?
2. lobby to let retirees cash out medical benefits and take it with them that way corporations can't plead mercy before courts when they have gone bankrupt
   

Read more: "Retiree Benefits Dwindling" by Carolyn Said

If Your Company Execs Are Being Invetigated - Your Job Maybe At Risk

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Today, Computer Associates International Inc. said it plans to lay off about 5% of its employees.

Last week, former Chief Executive Sanjay Kumar and former sales chief Stephen Richards were indicted on charges including securities fraud and obstruction of justice.

Are these linked?

Consider that crimes by a company's executives costs the company prestige and lots of money in:
- outside attorneys to deal with regulators
- fighting shareholder lawsuits
- lost managment productivity
- lost customers

New company managers brought in to deal with the crimes committed by old company managers will look for cost cutting measures. These measures will be focused on those areas that are most in control of management, namely salaries.

If your company is under investigation for crimes committed by your company's management, you might want to pay attention and start looking for a new company to work for.


WSJ.com - CA Will Lay Off 5% of Work Force To Trim Its Costs: "Computer Associates International Inc. said it plans to lay off about 5% of its employees"