Retirement Plans Under The knife at Kodak And Xerox

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Retirement Plans Under The knife at Kodak And Xerox

 user admin 2014-08-14 at 10:31:48 am Views: 489
  • #40282

    Retirement Plans Under The knife at Kodak And Xerox
    Matthew Daneman, Staff writer

    From Kodak and Major League Baseball to Boeing and Buck Consultants, numerous notable employers have thrown their older workers' Golden Years planning for loops in recent weeks with major changes to their retirement plans.

    This year alone has seen defense contractor Lockheed Martin, aircraft giant Boeing, Major League Baseball and publisher News Corp. freeze their pensions. And food processor Heinz, telecommunications equipment maker Alcatel-Lucent and computer hardware/software company NCR Corp. all announced lump sum pension buyouts to certain employees or retirees.

    Xerox Corp.'s HR benefits and consulting firm Buck Consultants last week said that effective Jan. 1, it would freeze its pension, though it would sweeten the company match for the 401(k) plan and broaden the definition of eligible pay. Several of Xerox's major pension plans already are frozen as a cost-cutting measure.

    In a statement, Buck Consultants said its pension change was "consistent with what many employers, including a number of firms in the benefits consulting and insurance industry, are doing. The changes also continue to align Buck's programs with Xerox's HR strategy."

    Meanwhile, Eastman Kodak Co. in July said that effective Jan. 1 it was eliminating the company match on its 401(k) and changing how it calculates retiree benefits in its Kodak Retirement Income Plan pension program. The change will see it doing away with the formula that paid out benefits based on a retiree's years with the company and average annual pay.

    In a conference call with Wall Street analysts, Kodak CEO Jeff Clarke said the change in retirement benefits will make it "competitive with companies in our industry" and save about $12 million a year.

    More such changes could be on the horizon. Aon Hewitt said earlier this year that, based on its surveying, employers that offer pension plans are increasingly interested in "de-risking" those plans — meaning trying to minimize the unpredictability pension plan costs — by giving retirees or former employees a window of time in which they can opt to take all their benefits in one lump sum.

    Of companies that offer defined benefit plans like pensions, roughly one in four surveyed by HR consulting company Aon Hewitt said they play to freeze the plan, close it off to new hires, or reduce benefits this year.

    The pension moves come as pensions themselves are becoming increasingly rare as defined contribution plans such as 401(k)s are today the norm. As of 2011, 18 percent of private sector workers were covered by a pension in the United States, down from 35 percent in the early 1990s, according to U.S. Labor Department data. And nearly half of Fortune 1000 companies that have pension plans have frozen one or more of them, according to a Federal Reserve Board working paper.

    Meanwhile, roughly 80 percent of full-time workers have access to an employer defined contribution plan like a 401(k), with 80 percent of those workers actually participating, according to Labor Department numbers.

    In the 1980s, the federal government and then Bank of America were the first major employers to start phasing out or scaling back their pension plans in favor of 401(k) plans, said Dallas Salisbury, CEO of the Employee Benefit Research Institute. And Kodak is following in the footsteps of numerous companies that offer both defined benefit and 401(k) plans, he said.

    "So what Kodak and Xerox have apparently announced is part of a multi-decade trend by employers of all sizes," Salisbury said.

    Many Americans' retirement plans are not much more than a hope and a prayer. A survey by the Employee Benefit Research Institute found that one in five respondents without a retirement plan had saved anything for retirement.