Word: payouts
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This bleak demographic problem has been compounded by rising prices and the trend toward earlier retirement. Inflation erodes the real worth of the $280 billion that companies and unions have built up in private pension funds and increases the payout needed to keep the elderly out of poverty. A person who began contributing to a pension fund when he was earning a respectable $2,000 per year in 1939 may now be receiving $6,000 a year from that fund and finding it mighty hard to make do. Earlier retirement, mean while, is shortening the period during which people contribute...
Already, just about every employ with a pension plan is having to pay soaring retirement costs. At Atlantic Richfield, the eighth largest U.S. oil company, the pension payout jumped from $60 million in 1976 to $80 million last year. The pension burden has become heaviest in the older capital-intensive industries such as steel, rubber and farm equipment, often because tough unions have increasingly asked for fringe benefits instead of simple wage hikes. Among other firms carrying particularly weighty pension loads are Uniroyal, Wheeling-Pittsburgh Steel and the Budd Co. A great many other firms have not taken care...
...both worlds, high interest costs and disintermediation." Disintermediation is bankers' jargon for loss of deposits to higher yielding investments, such as Treasury bills. For a while, savings officials thought that this had been averted through the introduction in mid-1978 of six-month money-market certificates (M.M.C.s), whose payout is tied to the going Treasury-bill rate, currently 8.87% for six-month bills. But the M.M.C.s did not bring in just new money; they also attracted funds that the thrifts already held in lower yielding savings accounts. Result: the savings institutions' deposits held up, but their profits were...
...Most of the heirs of the 275 victims will file lawsuits against McDonnell Douglas. Estimates put its potential payout at around $100 million. The greatest part of the damages would be covered by insurers, but the company itself would have to pay any punitive awards...
Federal interest rate ceilings limit the payout on their passbook accounts to 5% in commercial banks and 5.25% in savings institutions, which is less than half the current rate of inflation-and much less than a higher-roller gets for investing $ 1,000 or more in a money market mutual fund. The small saver's squeeze is summed up in a Citibank anti-ceiling advertisement: "Deposit $500 with us today and we'll give you back $475 next year...