It seems like pensions plans are always mentioned as the excuse for various companies financial problems and even gov woes. I know they were mentioned during the car industry bailout. Hostess claims pension plans are at least part of the reason for their bankruptcy proceedings.
Even gov is using them and other benefits as their excuse. I can’t believe leave payouts are blamed. Vacation leave has always been paid to employees when they terminate. Thats why leave balances are capped. I can only carry 300 hours on the books. I either use the excess or lose it.
Aren’t pension plans protected in separate accounts and managed by groups like TIAA/CREF, Fidelity and other groups?
As I understand it, pensions aren’t some vague promise to pay an employee thirty years from now. I know my payroll check stub shows my retirement deduction and my employers contribution. The percentages haven’t changed throughout my 25 year career… My employer contributes a basic 5% to every benefits eligible employee. There’s another matching percent that caps at 10% total. I contribute nothing then, I get the basic 5%. I contribute 7% then my employer contributes 7%. Me - 10% Employer 10% and thats the most they will match. TIAA/CREF invests the pension plan money. I took a hit in 2008-2010 but its steadily climbing back up.
So why are companies claiming pensions are such a huge burden? Why are they saying that the Hostess employees will lose their pensions? Isn’t that money safely held by a third party management/investment company (like TIAA/CREF or Fidelity) somewhere?
Can someone explain how pension plans are a problem for companies?