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Barring relief from Washington, pension plan sponsors may revert to benefit cuts. Here's how that might work: A typical pension plan formula is based on an individual's ending salary, multiplied by a variable, such as .015, and then multiplied by the number of years of service. So an employee earning $150,000 a year, at age 60, with 30 years of service, would have the following formula: $150,000 x .015 x 30, which equals $67,500 annually in pension payments for the rest of her life. To reduce costs, a company can reduce that middle variable from...
Some companies may eliminate, or freeze, pension plans altogether. On Wednesday, for instance, AK Steel, a leading automotive and appliance industry supplier based in West Chester, Ohio, announced it would freeze defined benefit pensions plans for salaried employees and replace with a defined contribution benefit plan that includes about 3% of a worker's annual salary. "Unfortunately, this extraordinary global economic downturn requires significant and rapid measures to reduce our costs in light of sharply lower order levels from our customers," James L. Wainscott, AK Steel's CEO, said in a statement...
...worth noting that barely half of the companies that Mercer examined reported sponsoring a so-called defined pension plan: Simply put, it's becoming a relic, as companies scale back retirement options to shave one of the most expensive employee costs...
...latest prescription for the ailing housing market could turn out to be more placebo than cure, and a costly placebo at that. Some economists question whether just lowering interest rates to a historically low 4.5% will be enough to boost housing sales or prices. What's more, the plan could end up costing $25 billion a year, using up valuable funds needed to fix the housing market and providing no relief to the millions of homeowners now facing foreclosure...
...future Defense Secretary. During the presidential campaign, Gates criticized Obama's 16-month withdrawal timetable, but now that proposal doesn't look very different from the security agreement the Bush Administration has since signed with the Baghdad government. Nor has Gates offered any resistance to Obama's plan to install his own loyalists in the upper echelon of the Pentagon bureaucracy, which is now staffed largely by Rumsfeld holdovers. "Every new President traditionally fills civilian positions at the Department of Defense," Gates said. "It will be no different...