Pension Today, Gone Tomorrow

The Nation: Private Companies Are Cutting Retirement Plans

(The Nation)  This column was written by Nicholas Von Hoffman.

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When Big Blue, as IBM was once called, decides it's time to start shedding pensions, the stampede is definitely on. A couple of weeks ago this company, which was once famous for taking good care of its employees in return for a Stepford-like obedience, announced it was freezing its pension program.

Until now perhaps no more than one large corporation in ten had abandoned the pension system, but since big business tends to rush pell-mell together with whatever is the fashionable idea of the hour, the IBM announcement is a harbinger of the disappearance of almost all retirement pensions in the private sector.

The big shots at the top – the people whose titles are designated by abbreviations like CEO, COO, CFO, CMO, etc. – will continue to enjoy some very golden years before they shuffle off this mortal coil. Others below them should brace themselves. Legislation is making its way quietly through Congress that will permit employers to cut, slice, hack and in a dozen different sneaky ways lessen the value of pensions.

Public sector employees are not safe from worry but, since they are usually organized and pull some political weight, their pensions should last a little longer. Everybody else in the private sector had best get ready to wave bye-bye to the idea of a reasonably carefree retirement during which the check comes in once a month and the big problem is whether to spend it on a long vacation or treat the kids to a new car. That's over, folks.

There are a variety of wrinkles to pension freezes. Some consist of not offering a pension plan to new hires; others, like IBM's, stop all pensions where they are now so that an employee will get on retirement whatever pension he has owing at the time of the freeze, but it will no longer grow in value. This is murderous on older workers, since pension benefits are based on the largest annual salary in the years immediately before retirement.

In the future employees will get whatever is coming to them under Social Security (assuming Republicans do not "reform" it out of existence, as they would dearly love to do), plus whatever is in their 401K plan on the bewitching day when the gang at the office takes them out for lunch to bid them adieu.