Pension News

A recent article in Financial Week revealed a big surprise.  ExxonMobil has the most underfunded defined benefit pension plan of all the S&P 500 companies.  Yes, you read that correctly.  A company yielding record profits has neglected to adequately fund its pension plan. According to the article, the ExxonMobil pension plan was funded at just above 80 percent at the beginning of 2008.

Given the current status of the world’s financial markets, the plan’s funding level has most likely dropped along with the funding levels of most pension plans.  Other companies are struggling with financial hardships, making it extremely difficult to fully fund their pension plans.  But ExxonMobil isn’t like those other companies.  This year Exxon Mobil broke the record for the largest quarterly profit ever.

It is outrageous that the most profitable company in U.S. history had an underfunded pension plan.  Many companies are now strapped for cash because of the current economic crisis.  Companies struggling to stay in business have laid off thousands of workers and cut back benefits.  But ExxonMobil isn’t like those other companies.

ExxonMobil has subjected its workers and retirees to potential benefit cutbacks because of the pension plan’s funding status.  Restrictions required by the Pension Protection Act of 2006 take effect based on a plan’s underfunded percentage and start with pension plans that are less than 80 percent funded.

ExxonMobil, it is time to fully fund your pension plan and pay for the benefits your workers have earned.  There is no excuse for a company with record-breaking profits to have an underfunded pension plan.  ExxonMobil has been one of the most successful companies in recent history.  Great success brings great responsibility.

Look Before You Leap: The Unintended Consequences of Pension Freezes, a new issue brief from the National Institute on Retirement Security (NIRS), makes the case for why pension freezes aren’t always a good idea for state and local governments. Read the rest of this entry »

Last week General Motors announced plans to temporarily suspend the practice of making matching contributions to their employees’ 401(k) accounts.  This cut, coupled with the impact of the reeling stock market, only adds to the sense of retirement insecurity felt by workers who have seen the nation’s pension and 401(k) account balances plummet by as much as $2 trillion in the past year and a half.

Now, as the Washington Post points out, workers are increasingly finding that they will have to fend for themselves when it comes to their retirement security. Read the rest of this entry »

During the last few weeks, the Wall Street roller coaster has wreaked havoc on the economy and the retirement assets of the millions of American workers with 401(k) plans.

For workers who, like me, are relatively young and decades away from retiring, the current economic crisis doesn’t make me terribly anxious about my 401(k).  While the economic downturn concerns me, I’m not too worried because I have ample time to prepare for retirement.  But I do admit that even I am too afraid to look at the balance in my 401(k) account!

But what about people who are closer to retirement age?  Read the rest of this entry »

A timely and provocative op-ed by BusinessWeek’s contributing economics editor Chris Farrell flatly states, “Keep Wall Street Out of the Retirement Business.”  Farrell goes on to ask:

Question is, in light of the current turmoil in the financial markets, should Wall Street manage any of our long-term retirement savings funds? Is the 401(k) plan, which has become the main retirement savings vehicle for the American worker over the past three decades, a mistake? The case for rethinking the 401(k) as a pillar of retirement savings is compelling. Read the rest of this entry »

What a week.  The Lehman Brothers bankruptcy, Merrill Lynch’s sale to Bank of America, and the government rescue of AIG were just the latest upheavals in this churning Subprime Summer.  I’ve been getting calls every day from reporters, wanting to interview people who are concerned about their 401(k) accounts.

People are right to be concerned.  For many American workers, a 401(k) account will be their only source of retirement income besides Social Security.  While one should expect market fluctuations to affect their account balances, no one likes to see their 401(k) take a nosedive. Read the rest of this entry »

In the past few days, large companies on Wall Street have been closing left and right, making the people who work at these companies jittery about many issues, including their retirement security.

The good news for these employees is that the money in their pension and 401(k) plans is protected from creditors, so that even when a company goes into bankruptcy, they don’t have to worry about their retirement money being used to pay back debts instead. Read the rest of this entry »

Happy 34^th Birthday, ERISA!

Today marks the 34^th anniversary of the date that the Employee Retirement Income Security Act of 1974, known to those in the field of pensions as ERISA, was signed into law.  In a tribute to the workers who would be helped by the new law, that day, September 2, 1974, fell on Labor Day. Read the rest of this entry »

An Associated Press story appearing in the Washington Post this week carries disturbing news about the deteriorating financial health of older Americans.

According to an analysis by the Consumer Bankruptcy Project, which studied bankruptcies filed between 1991 and 2007, the bankruptcy filing rate has risen dramatically for Americans over the age of 55, with the oldest age group having the greatest increase.  Read the rest of this entry »

Every day I receive calls from workers and retirees who need help with their pensions.  Often, the people I speak to are looking for lost pension income that their employers promised would arrive at a critical time in their lives - retirement.  These callers may be having trouble locating their pensions or finding out if they are even eligible to receive benefits. Read the rest of this entry »