Companies eager to conserve cash are trimming their contributions to their workers' 401(k) retirement plans, putting a new strain on America's tattered safety net at the very moment when many workers are watching their accounts plummet along with the stock market....
Here's an anchor, drowning man.
FedEx is not the only one.
Good thing those credit markets seized up ON PURPOSE, huh?
To many retirement policy specialists, the lost contributions are one more sign of America's failure as a society to face up to the graying of the population and the profound economic forces it will unleash. Traditional pensions are disappearing, and Washington has yet to ensure that Social Security will remain solvent as baby boomers retire and more workers are needed to support each retiree.
The company cutbacks may mean that some employees put less money into their retirement accounts. Even if they do not, the cuts, while temporary, will have a permanent effect by costing many workers years of future compounding on the missed contributions. No one knows how long credit will remain scarce for companies, or whether companies will start making their matching contributions again when credit loosens and business improves.
Final Fart From Massachusetts (second story down)
"We have had a 30-year experiment with requiring workers to be more responsible for saving and investing for their retirement," said Teresa Ghilarducci, a professor of economics at the New School in New York. "It has been a grand experiment, and it has failed."
In the typical 401(k) plan, the employer's matching contribution is more than just money for retirement. It also motivates employees to set aside more of their own money for old age. The more workers save in a 401(k) plan, generally, the more "free money" they can get from their employers under the matching provisions.
And the MORE $$$ Wall Street gets to play with.
Retirement policy specialists said they did not expect employees to react immediately to the loss of this incentive by stopping their own 401(k) contributions. Study after study has shown that employees tend to procrastinate when it comes to retirement-plan chores, and in this case the inertia may work, unwittingly, in their favor.
Translation: If you HAD NOT TOSSED YOUR MONEY AWAY at them, you are O.K.!
Americans, however, are facing extreme household financial pressure. Given the extraordinary times, President-elect Barack Obama has said that he would support allowing withdrawals from retirement plans without penalties, which would provide short-term relief but would further undercut American's long-term saving power.
I'll remember that!
"The problem is, we are heading into this serious recession, and we don't know how long it will go on for," said Alicia Munnell, director of the Center for Retirement Research at Boston College. "The bottom line is, people will have less money in their 401(k) plans, not just because the financial crisis has decimated their assets, but also because they will not have the employer match for some time."
Currently, most companies that offer 401(k) plans do provide some sort of matching contributions, according to David Wray, president of the Profit Sharing/401(k) Council of America, an association of employers that provide such plans.
Many of the latest 401(k) cutbacks are turning up in industries with obvious financial problems, like the auto industry, healthcare, and newspaper publishing.
Start telling the truth instead of pushing an elite agenda then!
Industries that depend on free-spending consumers, like resorts and casinos, are also seeing cuts. Often when one company in an industry cuts its benefits others will follow, to keep their labor costs competitive.
Translation: Everyone is doing it; corporations and businesses are like lemmings!
General Motors and
So unions are good, huh?
In addition to stopping their matching contributions, companies have also been freezing salaries this fall, shifting more of the cost of healthcare to their workers, and laying people off.
Yeah, you get all that, too, worker. Now drop them pants.
"These are really hard times and people are losing their jobs, and in some ways, a suspension of a 401(k) match, while bad, is probably one of the lesser evils out there," Munnell said.In announcing the suspension of the contributions last week, FedEx made clear that its workers in the sorting centers would not be the only ones feeling the pinch. Pay to senior executives is to be cut by 7.5 to 10 percent, and chief executive Frederick W. Smith said he would take a 20 percent pay cut.
Yeah, right, the rich are going to suffer. When I see 'em bending over at the shit pit with me, then I'll believe it.
Don't worry anyway, Americans, because there ain't gonna be any more pensions. Bush also gave 'em license to steal those.
"Bush signs law to ease pension rules" by Bloomberg News | December 24, 2008
WASHINGTON - President Bush yesterday signed into law legislation providing businesses and the elderly with short-term relief to help counteract effects of the recession.
The new law eases pension funding requirements by eliminating some penalties on companies whose funding falls below federal guidelines. Pfizer Inc., International Business Machines Corp., United Parcel Service Inc., and dozens of other companies said the 40 percent drop in the stock market this year would have forced them to make larger-than-normal contributions to the plans to meet federal guidelines.
Bush was reluctant to support the measure, spokesman Tony Fratto said, because it will increase the costs of near-term claims on the Pension Benefit Guaranty Corp. It also could lead to some benefit losses to workers over the long term, he said at a White House briefing....
Yeah, he was reluctant to do it. Then why not use the veto, jerk?
Yeah, I'll bet they had to move his arm for him to sigh it, uh-huh!
Critics said rigid withdrawal requirements would force the elderly to sell retirement assets at depressed values.
They ALREADY ARE: The Economy That Laid the Golden Egg