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Private Pension Issues

Archives: 2003

A U.S. Component Is Added to an Italian Scandal (December 30, 2003)
The US Securities and Exchange Commission is suing the Italian dairy and food giant Parmalat for luring US investors to buy more than $1.5 billion worth of bonds between 1998 and 2002, while overstating its assets by almost $5 billion. At the end of 2003, Parmalat was declared insolvent by a court in Parma, Italy, making it “one of the largest and most brazen corporate financial frauds in history.”

He's the Other Force in the Fund Investigation (December 27, 2003)
While Eliot Spitzer basks in the limelight for breaking the massive mutual fund scandal, the investigation has really been a team effort with fellow Harvard Law School classmate and Wall Street insider David D. Brown IV. A former vice president and associate general counsel at Goldman Sachs, Brown has found himself, in his capacity as head of the Investment Protection Bureau, up against people whom he originally hired. But Brown says his experience on Wall Street gives him unique skills to fight common practices, like market-timing and late-day trading, that he finds “reprehensible.”

Beware nasty side effects of 'cure' for mutual funds ( December 14, 2003 )
The Security and Exchange Commission proposed new rules targeting the late trading scandals in the mutual fund industry.  Opponents believe that targeting late trading might not be the best idea to resolve the problems. West Coast investors would have to place their orders in the morning.  It is clear that more research is necessary to come up with mechanisms that prevent the unfair advantage some after-hours traders enjoyed.

Senate Ends Year Without Acting on Pension Funding (
December 11, 2003 )
Unlike the House of Representatives, the US Senate did not come to any pension settlement before adjourning, leaving companies with traditional pension plans on their own: should they add millions of dollars to pay future benefits, or freeze or even close their plans? The best the Senate did was to say they would meet again in January to discuss this pension issue. The combination of poor investment performance in recent years and low interest rates has thrown many plans into deficit and the 30-year Treasury bond that is supposed to help the plans are making the situation worse especially since the bonds expire at the end of this December. Many companies have already frozen their plans, meaning they are closed to new employees and that those in the plan stop getting credit for further benefits.  In the meantime, some 20 percent of around 1,000 pension operators have frozen their plans, closing out contributions and new employees.  A sad day for workers!

Scandals Drive Investors To Private Managers ( December 10, 2003 )

With all the controversy swirling around the mutual-fund industry these days, some investors are turning to private managers. These professional money managers guide small investors with their money although individuals always have the ultimate say on what is happening with their account. However, this new rush towards private managers could be as risky as the mutual fund industry itself and small investors could lose more money.  And the fees are much higher than a mutual fund.  Do you want your savings churned by a fee-hungry “adviser?”  Caveat emptor!

Behind the Mutual-Fund Probe: Three Informants Opened Up ( December 9, 2003 )
Noreen Harrington gave the first clear evidence in a call to the office of New York Attorney General, Eliot Spitzer, that her former employer engaged in market timing and late trading. She accused her former employer Edward J. Stern, who ran an investment fund, of reducing his customers’ fund values by taking some of their gains away. The next call came from a former NYU intern who had been hired as a consultant for Canary Capital, to solicit companies that would let Stern late trade.  (The internship had turned into a job netting Mr. Nesfield $300,000 but a subpoena convinced him that he was engaged in soliciting illegal trades and should cooperate with legal authorities.)  David Brown, hired by Mr. Spitzer to work for the Investor Bureau Protection, collected all the information and with the help of the last informant, Mr. Goodwin, he managed to pursue the investigation up to Mr. Stern himself. The Securities and Exchange Commission has also jumped into the investigation under the pressure to keep up with Mr. Spitzer’s investigation. 

Pension Troubles = S.&L. Collapse? Some Say Bank on It ( December 7, 2003 )
Some economists, including Treasury Secretary John Snow, are cautiously comparing today’s pension fund scandals with the collapse of the savings and loan system of the 1980’s. Years of inaction and a failure to heed warning signals led to a disastrous government bailout of S&Ls, and some experts warn that the sick pension system is showing startling similar danger signs. While the government is considering easing the rules to help companies keep pace with pension contributions, this could be costly, and very unpopular, for pensioners.  

Getting a Refund After the Scandal: Gauging the Odds ( December 7, 2003 )
New York Attorney General Eliot Spitzer wants mutual fund companies to reimburse investors who lost money due to illegal trading practices, but how much individual shareholders will receive is still uncertain. Fund companies have not yet accepted the means of reimbursement demanded by Spitzer, and sums given to small investors may end up very low after divided among hundreds of investors.

New Rules For Mutual Funds (
December 3, 2003 )

After the market timing scandal of the mutual fund industry this fall, the Security and Exchange Commission is preparing its first draft reform to curb trading abuses. Two key proposals of rules are being discussed: to ban the after-hours trading that improved returns for large customers at the expense of long-term investors and to prevent market-timing speculators. If the agency does not respond with sufficient toughness, Congress appears ready to step in.

Pension Fund Relief Plan Fails to Clear the Senate ( November 26, 2003 )
The US Senate may not support a bill allowing companies in airline, steel and automotive, and other heavy manufacturing sectors to suspend pension contributions over the next two years. A weak stock market and low interest rates made it unusually difficult for companies to fund their pension programs this year, and some are in risk of collapse. However, the Bush administration and some Senators argue the plan would allow companies in designated industries to underfund already-weak pension plans and would also give them an unfair advantage over other industries.

Motivating Retirement Planning: Problems and Solutions
Gary W. Selnow, Pension Research Council, The Wharton School, University of Pennsylvania (November 2003)

People often find it difficult to make the right decision about retirement savings. The payoffs are in the distant future, and the promise of pleasure tomorrow can mean pain today. The wrong decision yields an instant gain, the outcome is uncertain, the decision can be postponed without immediate penalty. In the end, the pressures of immediate gratification, delayed benefit, the unknown, the uncertain, the uncomfortable, ally against wise decisions. Yet, while many people yield to these influences, many others make the right choice. That drives us to ask why. (Abstract Excerpt) 

Who’s Afraid of a poor old age? Risk Perception in Risk Management Decisions
Elke U. Weber, Pension Research Council, The Wharton School, University of Pennsylvania (November 2003)

Retirement planning and voluntary as well as mandated contributions to pension plans require a series of decisions under uncertainty. Those range from initial decisions about the magnitude of contributions and allocation across different investment options and choice of option providers, to periodic reviews of these decisions in light of possible changes in goals or circumstances. Behavioral decision research provides a series of lessons about how such decisions are made and thus for the optimal design of pension plans. (Abstract Excerpt) 

A Band-Aid for the Fund Industry's Broken Leg? (November 21, 2003)
The House of Representative’s bill on mutual funds does not resolve the issue of short-term trading abuse condemned in September 2003. It allows funds to increase redemption fees for investors who pull their money out too soon or who trade too often. Instead, this solution could make it riskier for long-term small investors to invest money they might need for emergencies. It will also make mutual funds less attractive in an increasingly competitive marketplace. Furthermore, redemption fees work only if they are universally applied and enforced -- but this is too hard to do. 

House Backs Bill to Overhaul Mutual Funds ( November 20, 2003 )

The House of Representative approved legislation reinforcing the ethical principles of the marketplace by banning some trading abuses and fund mismanagement, improving the disclosure of fee information and increasing the independence of fund boards to try to restore investors’ confidence. Many lawmakers voted for this measure in the hope that it would be strengthened later.  Lobbyists’ strong influence on legislators weakened the bill substantially from earlier versions conceived in the full light of Wall Street scandals.

Is the Mutual Fund Issue Abuses, or Is It Fees? (
November 19, 2003 ) After all the mutual fund scandals, legislators may end up focusing on the regulation of fees and costs that funds charge investors instead of trading abuses. For the New York attorney general, Eliot Spitzer, the Securities and Exchange Commission has too narrow a view when separating excessive fees from trading abuses: they are both “woven together by the common thread of failed mutual fund governance.” On the other hand, the chairman of the S.E.C., William H. Donaldson, is worried that Mr. Spitzer might try to set new rules alone. It is unclear where reform is going to come from but mutual fund investors need to know what they are buying and how much it costs.

Investors' worry: Will Spitzer point at my fund? (November 17, 2003) 
In the wake of New York Attorney General Eliot Spitzer’s recent investigation and indictment of mutual fund companies, disgusted investors have been dumping their mutual funds or shifting to companies untainted by scandal. Institutional investors were quick to act after the scandal broke, but small investors face bigger barriers - redemption fees, capital gain taxes and additional sales charges - and are not able to withdraw as rapidly.

Outrage Over Scandal Grows, But Reforms May Take Time ( November 16, 2003 )

Both Congress and the Securities and Exchange Commission are preparing for strong action to prevent future illegal trading at mutual funds. However, lawmakers and regulators still don’t have a clear picture of how to “clean up” the mutual fund industry. So far, the Senate Banking Committee is not rushing to legislate, and some SEC watchers are afraid the SEC “has almost made itself irrelevant because of its ineffectiveness.”  

Pension Tension (November 14, 2003)
“The US pension system is in trouble,” says this Washington Post editorial, “and one of the fixes Congress is considering could make matters dramatically worse.” The Post argues that a bill approved by the Senate Finance Committee to give companies with underfunded pension plans a three-year break from making pension payments simply allows companies to underfund pension plans even further. While some easing of the rules may be necessary, the proposed plan is dangerous for workers who could lose promised benefits if plans go under and for taxpayers who would be left to pay whatever relief money the Pension Benefit Guaranty Corporation (PBGC) can’t handle.

Pension Regulation Advances On Hill (November 14, 2003)
Congressional negotiators came to an agreement to make it harder for employers to convert a traditional pension plan into a “cash-balance” plan. While traditional pension plans accumulate more rapidly in later years, the cash-balance plan distributes benefits more evenly, benefiting workers who frequently change jobs. However, the plan hurts older, longer-time employees. A federal judge in Illinois ruled that cash-balance plans violate age-discrimination laws. 

Job Changers: Chill on Your 401(k) Cashing Out, Like Falling In Love, Can Be So Easy, But Both Need Perspective (November 12, 2003)
Many people are siphoning off their retirement money long before their older - and wiser - years. Nearly half of all workers who changed jobs last year voluntarily cashed out the savings in their 401(k) retirement plans instead of rolling over their assets into their new employers' plans or individual retirement accounts, according to Hewitt Associates, the Lincolnshire , Ill. , benefits-consulting firm that conducted the study. Cashing out of a 401(k) deprives workers of years of compounding, which can turn even small sums into a tidy nest egg. Not only will you be hit with a 10% penalty if you take out the money before age 59½, but you'll also be socked with ordinary income taxes.

Failed Pensions: A Painful Lesson in Assumptions (November 12, 2003)
Workers and retirees from three major companies have seen their pension plans diminish significantly because those companies based their pension plans on faulty assumptions. Companies assume the average retirement age and life expectancy of their workers to calculate how much to allocate to pension benefits. However, some companies use assumptions that workers will retire several years later than they actually do, resulting in grossly under-funded pension plans.

Strong Capital Faces Precipice Criminal Charges Could Be Filed Against Founder for Fund Moves (November 11, 2003)
New York Attorney General Eliot Spitzer may file criminal charges against Richard Strong, founder and chairman of Strong Capital Management, for improper trading in mutual funds. The case against Strong, one of several against large mutual fund companies, is complicated by the fact that Strong owns 90 percent of his company and was the primary decision-maker for the firm. 

Pension tax cost jumps 20% (November 11, 2003)
Portland property taxes rose 20% this year to cover higher pension and disability payments for Portland’s police and firefighters. A growing police force, higher number of retirees, and a spike in disability costs, as well as generous pension benefits approved by Portland voters, have led to soaring costs for the fire and police fund. The political power of the police and fire unions makes reduction of pension benefits unlikely. 

Deux ans après Enron, de nouveaux scandales agitent Wall Street (November 11, 2003)
New York Attorney General Eliot Spitzer exposed illegal trading in mutual funds that caused the loss of millions of dollars for small investors. In the US, half of all households invest in mutual funds, and the New York Stock Exchange will have to reform its system to restore public trust and prevent future abuse.

Provision to Ease Pension Problems May Hinder Talks Hill Panels Differ on Aiding Plans (November 7, 2003)
Lawmakers on Capitol Hill are trying to avoid a crisis in the nation’s private pension system already damaged by a declining stock market and low interest rates. The Senate Finance Committee approved a pension bill that will provide relief to the weakest and most under funded pension plans, but the bill is only a temporary fix. Senate and House committees continue to debate proposals for long-term solutions for the private pension system.

Teachers' fund wary of Putnam (November 4, 2003)
The Indiana State Teachers' Retirement Fund was keeping an eye on Putnam Investment due to its recent poor performance and high personnel turnover. However, many teacher retirees worry that the financial scandal over improper “market timing” trades and the subsequent withdrawal of $4 billion by other shareholders could sink the value of the fund.  Did Indiana’s public school teachers really want their future linked to such risky privatized investments? 

Meet Roslyn Platt, a Customer Of Putnam. She's Not Amused. (November 4, 2003)
As financial scandals erupt, small investors in mutual funds wonder if the system is reliable and if mutual funds have more hidden secrets. Some small investors believe that withdrawal is the solution; however, large withdrawals can lead to higher fees and even lower returns for remaining investors since managers sell to raise cash for departing investors. The mutual fund scandals are worrisome especially since 401(k) plans permit individuals to invest retirement savings in virtually unregulated firms that appear all to willing to cheat them.  Buyer beware!

Strong Funds' Chairman Resigns His Position (November 3, 2003)
The founder of Strong Mutual Funds, Richard S. Strong, resigned as chairman of the fund's board of directors, after New York Attorney General Eliot Spitzer said he would take action against him for improper trading of shares. For four years, Strong made profits by trading in and out of the company’s fund through his own account. As Spitzer commented, "If you ever wanted proof that there were two sets of rules — one for insiders and one for individual investors — this is it." Strong still runs the company as chairman and chief executive of Strong Capital Management.

Putnam CEO to Step Down Following Fraud Allegations (November 3, 2003)
The chief executive of Putnam Investments, Lawrence J. Lasser, will resign amid federal and state civil fraud allegations. The company announced it will hire a former Securities and Exchange Commission official to review policies and make recommendations to ensure that the company operates legally and ethically. Nonetheless, public pension funds in six states pulled money out of Putnam Investments last week.

Senate Panel Passes Pension Relief Bill (October 29, 2003)
The US Senate approved a three-year interest rate adjustment allowing businesses to put less money into their workers’ retirement plans. Traditional pension plans have been hit hard by low interest rates, a poor economy, and stock market losses. Labor unions support the measure, fearing that without relief, companies might stop offering retiree benefits.

Lieberman to Propose Increased Oversight for Mutual Funds (October 28, 2003)
As the mutual fund scandal unfolds, most politicians have remained conspicuously silent. Only one 2004 presidential candidate, Connecticut Senator Joseph I. Lieberman, has drawn attention to the issue, proposing a special office for investor protection at the Securities and Exchange Commission and limiting the number of fund portfolios one director could oversee.

Fewer firms provide for retirement (October 28, 2003)
The percentage of U.S. companies offering retirement plans has dropped sharply since the late 1990s, according to a new study of Census Bureau data. The percentage of employees participating in retirement plans has fallen by roughly the same amount. Although the decline is partly a result of the economic slowdown, "part of it is more of a long-term trend" that may not reverse course when the economy recovers, says Patrick Purcell, a researcher with the Congressional Research Service who did the study.

Young generation not saving for retirement (October 27, 2003)
Even as younger workers watch parents and older generations go back to work after retiring because their savings were not adequate, they still are not doing enough to provide for their own financial futures.
Twenty-nine percent of American workers say they have not begun to save for retirement, and 61 percent have not calculated how much they will need to save to reach their retirement goal, according to a recent survey by the Employee Benefit Research Institute in Washington.

Pension shortfalls add uncertainties over retirement (October 26, 2003)
During his 35-plus working years at Bethlehem Steel in Baltimore, Melvin Schmeizer endured blazing heat and freezing cold, layoffs and odd shifts. But by volunteering for tough jobs and overtime, he boosted his income and, ultimately, his pension, to $2,850 a month when he retired in 2001. But Schmeizer's retirement plans were knocked out cold last year, when Bethlehem went into bankruptcy and the Pension Benefit Guaranty Corp. (PBGC), the government pension insurance arm, took over the company's pension plans. And while that means Schmeizer's pension will not vanish, it will be cut to $1,700 a month. "Well, the sky did fall," he said. In fact, the sky is falling for a number of American workers. The country's entire retirement-income structure is being battered by an unprecedented wave of demographic and economic changes.

Mutual-Fund Scandal Clouds Bottom Lines (October 20, 2003)
US investigators studying mutual fund scandals suggest that long-term shareholders may be losing millions of dollars to short-term “market timer” trading.  The rapid technique of buying and selling mutual funds, known as market timing, creates profits for short-term traders at the expense of long-term shareholders, including future retirees. 

For Staid Mutual-Fund Industry, Growing Probe Signals Shake-Up (October 20, 2003)
New York Attorney General Eliot Spitzer wants his investigations of the spreading mutual fund scandal to help “clean up” yet another part of the financial world that favors big investors over smaller shareholders like workers and retirees. His investigation reveals that well-informed speculators exploit the difference between fund share prices and underlying assets to make huge profits, which “dilutes” profits for long-term investors. Even more shockingly, some fund employees help big investors exploit the market in order to lure more business. The SEC is considering legal changes that would make short-term trading more difficult and protect small investors. 

Pension Math Proves Elastic in Court Case Over Pilots (October 21, 2003)
US Airways said its pilots' pension plan was terminally ill earlier this year, but now the airline is changing the prognosis, in hopes of saving money. Last winter, when it became apparent that the airline could not emerge from bankruptcy without defaulting on the pilots' pensions, the government made calculations using the rate required by law when plans are terminated. That interest is based on a rate used by life insurance companies for obligations similar to pensions known as group annuities. Last March, the rate was 5.1 percent. The pension agency concluded that the total value of the pensions owed the pilots was $3.4 billion. Because the pension fund held assets of $1.2 billion, that left a $2.2 billion shortfall, the agency said. It made a claim for that amount on US Airways' stock after reorganization. 

Pension Fund Branches Out With Ventures in Real Estate (October 19, 2003)
The largest pension fund for New York City employees invested for the first time in commercial real estate. The New York City Employees Retirement System’s investment advisor says the new strategy diversifies pensioners’ assets preventing bigger losses in pension benefits, while supporting the growth and redevelopment of the city’s economy.

Guarantor of pensions faces deficit (October 15, 2003)
The US Congress expects to pass new legislation enabling corporations to put less money into employees’ retirement plans in the next two years. The legislation comes as corporate pension funds face record deficits, leading unions and workers to fear that without reform, their pension plans would collapse completely. However, the director of Congress’ General Accounting Office warns that Congress must face the long-term problem of reforming the private pension system to prevent further reductions in pension benefits.

New York City: Report Criticizes the City's Management of Its Pension Funds (October 14, 2003)
A new independent report commissioned by the New York City comptroller's office criticizes the way the city manages its pension funds, which have become the fastest-growing drain on the city's budget in recent years. The report suggests that the city's pension funds may be too reliant on stock investments, questions the management structure of the funds and urges the city to formally codify the goals and procedures at each of the city's five pension funds in written policies. The value of the five pension funds has shrunk to just under $74 billion in June from $105.6 billion in 2000 because of heavy investment losses, a state law forcing the funds to pay richer benefits, and salary increases for city workers, officials said. As a result, the city has had to increase drastically its annual contributions to the pension funds to keep them healthy for the future.

States Risk Bigger Losses to Fund Pensions (October 12, 2003)
Many state and local governments have turned to selling bonds to finance a shortfall in pensions for police officers, firefighters, teachers and other public employees because bonds bring instant cash, allowing no further tax increase or reduction in retirement benefits. Cities and states hoped to make a profit from investing bond revenue in the stock market, but recent market downturns have left governments in mounting debt. Some government finance specialists and academics argue that speculative investments are unsuitable for pension funds.

Financial firms gear up for boomers' retirement (October 10, 2003)
As the “baby boomer” generation enters retirement age, financial institutions are positioning themselves to profit from fears about how to finance a long retirement while many corporate pension programs are dwindling.  Financial service companies are scrambling to become “one-stop shops for retirement products, services and financial advice” for the large, relatively wealthy generation.

Rude awakening Bethlehem workers hurt by company's bankruptcy (September 30, 2003)
Company-backed pension plans are hitting hard times now, and that could mean trouble for tomorrow's retirees. There's little you can do to shore up your corporate pension. But you can find out how healthy the plan is - or isn't - and compensate for its shortcomings with your own savings, financial planners say. "People are concerned about everything - the soundness of Social Security, pensions, health care," said Paul Eberz, a financial planner in Amherst . Employer-backed pensions should be viewed with a skeptical eye, he said, like other retirement benefits that lie outside your control. Federal insurance for pensions is limited, and some employers are changing their plans in ways that reduce future benefits.  

Change Urged to Diversify Pension Fund in New Jersey (September 19, 2003)
Seeking support for a plan that would allow private investment managers to run part of New Jersey's $60 billion pension portfolio, the McGreevey administration released a consultant's report today that urges the state to reduce its risk by diversifying its investments. New Jersey's employee pension system, the only public retirement fund in the country managed solely by civil servants, lost about a third of its value during the stock market slump of the past three years. Although the losses were comparable to the drop in the market, State Treasurer John E. McCormac has argued that the state can get better returns, and assume lower risks, if it hires professional investment managers to run the fund.

Workers Dealt Double Blow (September 11, 2003)
Employees at The Hartford Financial Services Group got a double-whammy Wednesday as the company announced it will replace its pension plan with a controversial alternative and shift more health care costs to workers.
Although the changes are raising employee anxiety, The Hartford cites soaring costs and says it's trying to save money and avoid another massive layoff.The Hartford will switch Jan. 1, 2009 from a traditional pension plan, which is based on final years of pay, to a "cash balance" plan. The new plan will build up money in accounts throughout employees' careers. Workers hired by The Hartford in 2001 or later - about 30 percent of the employees - are already subject to a cash balance plan.

UAL asks Congress for relief on pensions (September 10, 2003)
United Airlines' parent is asking a U.S. Bankruptcy Court for six more months to file its reorganization plan as it lobbies Congress for temporary relief from billions of dollars in pension payments. UAL says its pension problem is scaring away potential investors. It has said it hopes to complete reorganization in early 2004. UAL now wants until April to file a reorganization plan, preventing other parties from filing competing plans during that time.

Companies Helping Workers Plan Retirement (September 07, 2003)

More companies are looking at ways to help employees plan for retirement. Many of these planning programs consist of seminars, online modeling tools and counseling sessions that are specifically designed to help workers close to retirement figure out when they would like to retire, how much money they'll need to maintain their standard of living, and how much more they need to save to fill gaps between their savings and future needs.


Business Pushing Pension Change (September 2, 2003)
As Congress returns to work from its August recess this week, business lobbyists will be angling for quick action to overhaul the pension-funding system. In theory, legislators have until the end of the session to resolve a multibillion-dollar question of how businesses must calculate their pension liabilities. That's when a temporary provision that papered over the problem for two years expires. If nothing is done, many of the nation's largest companies will be forced to make big cash contributions to their pension funds in 2004.

Many Wary of Trenton Plan to Privatize Pension Fund (September 4, 2003)
The McGreevey administration's plan to allow private investment firms to manage New Jersey's multibillion-dollar employee pension funds is beginning to emerge as a sensitive issue in several pivotal legislative elections this fall. New Jersey is one of just two states that allow public employees to manage a major pension portfolio.  After the downturn in the stock market three years ago reduced the value of the retirement fund by almost a third, the state treasurer began lobbying to hire outside investment managers and diversify the fund's holdings.

Pension funds pinched, stirring calls for reform (September 3, 2003) 
Millions of Americans, retired or getting close to it, now face questions about the health of their pension plans.
Large companies from IBM to General Motors Corp. are struggling to meet their obligations to retirees. The reasons, in the view of experts, range from poor planning to a deep and surprisingly long bear market in stocks - in which pension funds invest.

Pension plans see modest increases (September 2, 2003)
Managers of public-worker investments try to find the right mix of index funds and active money advisers.
After three years of losing money, last spring's Wall Street rally modestly boosted the value of investments at the region's biggest pension plans, enabling their newly appointed managers to post small gains for the last fiscal year. But the managers of these public-agency investments know they will need more than a good quarter or a modest boost to prevent big increases in taxpayer subsidies for the plans, which fund monthly checks to more than 300,000 retired teachers, legislators, and other government workers in Pennsylvania and New Jersey.

'Perfect storm' batters at corporate pensions (September 2, 2003)  America's corporate pension system is said to be facing a perfect storm: Stocks have taken a big hit and returns on bonds have plummeted, leaving pension funds with reduced earnings to pay benefits. In addition, corporate downsizing and lengthening life spans have left many companies, particularly in manufacturing, with a rising ratio of retirees to active workers.

Uniting to repair pensions (September 1, 2003)                               Adversity often brings together unlikely allies. So, as we celebrate Labor Day, it is not surprising that business and organized labor have come together to express their common concern for the future of the pension system — specifically, defined benefit pensions funded by employers that pay a prescribed and guaranteed lifetime benefit. According to the AFL-CIO, these pensions "are workers' best bet for retirement security on top of Social Security payments." Many businesses, especially large companies, agree and they voluntarily sponsor these plans for their workers. But this system is in steep decline and the looming threats make the outlook bleak. 

Pension refinancing bill subject of special election (September 1, 2003)    The state could save about $90 million in the two-year budget, an official says. Mail ballots are on the way to voters for a statewide vote on a measure that at first glance seems like something only an accountant could love. The measure comes at the request of State Treasurer Randall Edwards, who wants to refinance, at a lower cost, the state’s share of the public pension system’s debt. Lawmakers set a special election on the proposition for Sept. 16 at his request.

Retired and working (August 27, 2003)
Changing lifestyles and economic pressures are forcing retirees back to work and keeping senior citizens on the job longer than they expected. The desire to stay active and the boredom of retirement are part of the reason more senior citizens are staying in the work force. But many others aren't sticking around the office because they want to - they need to. More than 13 percent of people across the country 65 and older were employed or looking for work in March 2002, according to a recent Census Bureau report.

Corporations seek creative pension solutions (August 27, 2003)
U.S. Steel is strapped for cash but still has to shore up its underfunded pension plans. Its solution: Use land instead. Timberland, to be exact, 170,000 acres in all. That's surely thinking outside the box, something businesses are being forced to do as they try to cover the shortfalls in their pensions. But the creative route isn't without risk. There is a chance plans could end up worse off.

It's never too late for older workers to catch up on retirement savings (August 26, 2003)
As much as we like to think of ourselves as masters of our fates, many things in life are out of our control. The weather. Crab grass. Drivers who won't use their turn signals. There is one important aspect of retirement planning you can control: how much you save. And if you're age 50 or over, you have a golden opportunity to take charge of your portfolio. The 2001 tax bill allows workers 50 and older to make catch-up contributions to 401(k)s or similar employer-sponsored savings plans. This year, older workers can contribute up to $14,000 to their retirement plan, vs. $12,000 for younger workers. By 2006, older workers will be able to contribute up to $20,000 of pretax income to their 401(k) plans.

Pensions That Discriminate against Older Workers (August 25, 2003)
Pension plans increasingly under attack by older employees of IBM, though, it's becoming clear that a company's best interests are not always going to intersect with those of all its workers. That's why Congress needs to step up with clear legislation that would reform federal pension laws for the first time in a generation. Until then, lawsuits and divergent court decisions will become the norm, leaving both workers and companies in a state of pension limbo. Worse, facing higher costs, companies threaten they might abandon cash balance pension plans altogether.

U.S. to Allow Northwest Air to Use Stock in Pensions (August 19, 2003)
The Labor Department issued a rare exemption to federal pension rules yesterday, allowing the Northwest Airlines Corporation to use the stock of a regional airline subsidiary to help cover the $1 billion shortfall in its employee pension plans. The action, approved by the department's Employee Benefits Security Administration, allows Northwest to contribute up to 100 percent of the stock of Pinnacle Airlines, based in Memphis, to its three plans to fund a $223 million pension obligation for 2002.

IBM case already affecting pension plans (August 19, 2003)
With help from a federal judge, Kathi Cooper has thrown a monkey wrench into the world of corporate pensions. In late July, Cooper, 53, an internal auditor at International Business Machines Corp., won a ruling that could make it tougher for companies to convert traditional pension plans into "cash-balance" retirement plans. U.S. District Judge G. Patrick Murphy, ruling in IBM v. Cooper, found that the computer company illegally discriminated against older workers when it switched to a cash-balance plan in the 1990s. Stay tuned!

Pension tension mounts over cash-balance plans (August 11, 2003)
If Kathi Cooper hadn't graduated from the University of Texas with top honors in accounting, she might not have known that IBM's decision to convert its traditional pension to a cash-balance plan would shortchange her retirement by $400,000. "I couldn't believe that cutting our pension payout to benefit younger workers wasn't age discrimination," says Cooper, 53, a 24-year IBM veteran from Bethalto, Ill., who just won a federal court victory for herself and 130,000 coworkers.

Pensioning off company schemes (August 11, 2003)
It is easy to be nostalgic about final salary, or defined benefit, company pension schemes. Millions of people derive retirement income from them; hundreds of companies have used early retirement to ease restructuring. But too many feathers have been plucked from the golden goose. Governments have removed tax advantages, employers have taken too many contributions holidays and members have been living longer. The goose was, in any case, hatched in a paternalistic era, when breadwinners had a job for life. What problem lies here?

Many retirees select lump sum But some annuities' features might be worth more in the long run (August 8, 2003)
When Susie Cooke took an early retirement package from Verizon last year, she opted to receive her pension benefit in one lump sum rather than as a lifetime annuity. Many pensions provide only an annuity payout. But when they offer a choice, retirees often select a lump sum, according to a government report released last month. That is cause for concern, many retirement experts say. Workers are retiring earlier and living longer -- adding to the risk they will outlive their nest eggs. An annuity is intended to alleviate the financial uncertainty by providing a stream of income for as long as the retiree lives.

STRS director steps down (August 6, 2003)
Columbus - Board members of the state pension fund for teachers voted on Tuesday to break the contract of its executive director two years early following criticism of his spending practices and attitude toward system members. The State Teachers Retirement System board voted 5-3 to accept a negotiated settlement with Herb Dyer that calls for Dyer to step down in exchange for $550,000 in salary, benefits and accrued vacation and sick leave. Stay tuned!  

Principal regarded as buyer for Cigna pensions (August 3, 2003)
The Principal Financial Group Inc. was keeping mum Wednesday on reports that the Des Moines company could be a potential bidder for another insurance company's pension-administration business. Cigna Corp., the third-biggest U.S. health insurer, recently hired Goldman Sachs Group Inc. to arrange the sale of its pension business - a deal that experts said could bring as much as $2 billion. Cigna said Wednesday it has not decided whether to sell the pension business or spin it off.

Employees given responsibility for their healthcare, retirement (July 27, 2003)

Rising unemployment is the most pressing issue for today's labor market, workers on the job also face long-term economic challenges. The problem: Safety nets for healthcare and retirement -- historically provided through work -- are developing holes. The trend is likely to worsen.

On the Job: Incentive to cheat on pensions (July 21, 2003)

Warren Buffett, chief executive at Berkshire Hathaway Inc., said current pension accounting rules encourage companies to mislead investors. Accounting rules call for companies to report expected gains in pension investment returns, even when they suffer losses, as a way of reducing volatility. These rules allow companies to boost profits. Stay tuned!

Bush Pension Proposals Get a Cold Reception From Congress (July 16, 2003)
The Bush administration's plan to overhaul a pension-funding formula ran into sharp criticism at a House hearing. Members of the House Ways and Means and Education and Workforce committees, which share jurisdiction over pension issues, expressed concern that the Bush plan would increase volatility in pension-plan funding, thereby encouraging companies to drop traditional defined-benefit pension plans.

Documents Disclose Wider Pension Deficit (July 15, 2003)

Documents filed in federal bankruptcy court reveal that the total deficit of United's four main domestic pension plans is $7.5 billion, at least $1 billion more than the deficit disclosed in the company's annual report. The figure derived from the court documents represents how much of a shortfall United would have if it terminated its major pension plans on April 15 and tried to use the assets of each plan to cover the benefits already earned by its workers.


US airlines seek exemption from pensions top-up (July 14, 2003)

US airlines have been trying for months to come up with a legislative solution to their $22 billion pension deficits. The US Congress will consider this week allowing big US airlines to defer for five years the requirement to make cash contributions to make up for growing deficits in their pension plans.


Insurers adjust to aging U.S. population Policy terms, rates relax as more people live longer (July 14, 2003)

Life insurers are lowing rates or relaxing terms for older Americans due to longer life spans and medical advances. Others are increasing age limits and adding more price categories for seniors. As investment assets shrank during the bear stock market, more seniors have been buying term insurance that provides a death benefit to make sure their spouse is provided for if they die first.


Firms Had a Hand In Pension Plight (July 10, 2003)

As many companies worried about the “looming crisis” of pension plans, Congress and the White House are moving to offer companies relief. But the author points out that companies contributed to the problem themselves. He analyzed that companies “did so through a variety of strategic moves to plump up earnings or cut costs, at the price of reduced funding for their pension plans”.


An onerous legacy (July 10, 2003)

The number and size of deficits in American company pension funds are growing, with a combined hole for 500 of the biggest US companies at $239bn at the end of May. The gaps have been created by shrinking asset values, rising liabilities, and falling interest rates. The article provides an analytic view of the company pension fund gap in the U.S.


Bush Seeks To Change Pension Calculation (July 8, 2003)

The Bush administration proposed legislation to require companies to set aside less money and to release more data. According to the proposal, employers will link the calculation of corporate pension liabilities to corporate bond rates instead of Treasury bonds, which would lower the amount of money many companies would have to put into their pension plans. The legislation will also force companies to disclose more information to their workers about their pension plans' financial conditions, assets and liabilities.


Suspending the Employer 401(k) Match (June 2003)

“Charles Schwab & Co.'s decision in March 2003 to suspend its matching contribution to its 401(k) plan made headlines. But Schwab is not the only company to suspend the employer match. This Issue in Brief looks at the nature of the employer match in 401(k) plans, the role that the match plays in individual participation and contribution decisions, the extent to which firms are cutting back on their matching 401(k) contributions, and the implications of the cutbacks for individuals and the plans themselves.”


Delphi considers bond sales to boost pension plan (June 30, 2003)

Delphi Corp., the world's biggest supplier to the auto industry and largest manufacturer in Western New York with 4,400 employees, is said to consider following the lead of General Motors Corp. by selling bonds in order to plug a major shortfall in its pension plan. Delphi is one of several companies whose debt ratings were lowered by Standard & Poor's because of projected pension expenses.


US sues Enron over pension losses (June 27, 2003)

The federal government filed a lawsuit on June 26 against fallen energy giant Enron, its former directors and a number of executives for failing to protect workers' retirement assets. The suit is the culmination of an investigation launched in November 2001 by the Department of Labor. In addition to the former Enron board members, it names the members of the administrative committee in charge of the 401(k) plan, and former top executives Kenneth Lay and Jeffrey Skilling.


Employees Could Be Forced to Pay More for Their 401(k)s (June 24, 2003)

The Labor Department said in mid-May that retirement plan sponsors can pass along certain administrative costs to individual participants. Employees may soon have to pay more out-of-pocket costs related to processing requests and calculating benefits under defined-contribution plans. These costs can run anywhere from a few dollars to hundreds of dollars, depending on the paperwork and resources involved.


Pension woes go on with falling interest rates (June 23, 2003)

After hit by years’ of crippling bear market, America’s corporate pension funds will be facing more pressures resulted from low interest rates. The author of the article warns that declining interest rates will inflate companies’ pension obligations and affect companies with defined benefit plans, or those that promise future pension payments to their employees.


GM to plug pensions hole via $10bn bond (June 22, 2003)

General Motor announced last Friday that it would sell $13 billion debt in the unsecured and convertible debt markets. Of the total to be raised, about $10 billion will go to GM's auto operations, and be used mainly to shore up the company's U.S. pension funds. The debt offering is the company’s move to take advantage of near-record-low interest rates to help ease some of their looming pension obligations. It would be the largest-ever debt package by a U.S. company.


Executives' 'greed' under attach (June 17, 2003)

The CalPERS board issues a call to limit stock options given to corporate leaders Monday. Trustees of the CalPERS said they want the nation's largest companies to grant their five top executives no more than 5 percent of available stock options.


Business urged to plan for retirement (June 16, 2003)

IRS encourages small firms to examine how they help workers prepare for the future. Small business owners will be getting reminders about the benefits and requirements of retirement plans from the Internal Revenue Service. The agency is trying the outreach approach to persuade owners to start retirement plans or to make sure their existing plans comply with federal tax regulations.


Avoiding Pension Plan Time Bombs (June 16, 2003)

Pension plans are a way to attract and retain talented individuals for corporations; however, they can also become just another problem for corporate management in a bear market with low interest rates and profit margins. 360 of the S&P 500 companies have defined benefit pension plans, which lock companies into paying out specified amounts and pose serious pressure on corporations.


Variable annuities put pinch on some retirement plans (June 15, 2003)

Many seniors saw their retirement dollars dwindle as they invested their pension plans in variable annuities. Aggressive insurance agents and brokers oversold thousands of people on the hazy virtues of variable annuities, often described as mutual funds wrapped in an insurance policy. Regulators say consumers were not warned of risks or told that the complex contracts carry large commissions, hidden fees and steep surrender charges if money is withdrawn too soon. Another con job targeting older persons.


U.S. Economy: Pension Costs Rise, Threatening to Slow Growth (June 10, 2003)

Rising pension liabilities may hinder the U.S. economy by forcing companies to divert funds from investment and hiring. Companies whine now about pension obligations to workers—even though they count on their employees to show up for work everyday and create the products and wealth of the firm.


US pensions insurer mulls switch to bond investments (June 10, 2003)

The Pension Benefit Guaranty Corporation, the US government agency that insures occupational pensions, is undertaking the first review of its investment strategy in a decade to consider switching some or all of its equity investments into bonds. This move would send a signal to US pension funds about the concerns that equities cannot be counted on to deliver the returns needed to pay benefits.


Age bias claim tested in IBM pension conversion case (June 7, 2003)

Kathi Cooper, a retired IBM pensioner, sued the company for age discriminating pension changes made in the 1990s. According to her lawyers, Cooper would get larger amount of pension if she were younger regardless the number of years she worked for the company. A federal judge will rule on this important legal challenge in the next several weeks.


Government takes control of bankrupt CF's pension plan (June 3, 2003)

Bankrupt, Consolidated Freightways failed to make its April contribution, leaving its pension plan $276 million short of obligations. A federal oversight agency announced the takeover of Consolidated Freightways' pension plan Tuesday as a result. The move affects 8,000 of the Vancouver-based company's workers and retirees.


Falling interest rates seen boosting pension woes (June 3, 2003)

Corporate pension plans suffered from the dismal stock market last year. Although recent months have seen a rising stock market, its benefits are outweighed by sharply lower interest rates, which have rapidly boosted pension obligations faced by companies.


Administration Promotes Private Health Plans as Money Saver (June 3, 2003)

The Bush administration wants to use drug benefits as an incentive to encourage older Americans to enroll in private health plans. People who stay with the traditional, government-run Medicare program would receive modest drug benefits, while those who join private plans would get much more extensive coverage. The Administration said today that greater use of private health plans would save money for Medicare.


Pension costs hurt FedEx (June 2, 2003)

FedEx expects to take a $US 230 million to $US290 million pretax charge to pay for the retirement and severance package for its FedEx Express unit. The packages are offered to about 12% of FedEx Express’s 116,000 US employees.


Reforms May Limit 401(k) Loans (June 2, 2003)

In response to last summer's corporate accounting scandals, Congress made corporate loans to executives illegal. However yet pension laws require that all 401(k) participants be treated alike. Some experts believe that some employers may eliminate 401(k) loans altogether to play it safe.


FASB Delays Pension Decision That Could Hurt Balance Sheets (May 29, 2003)

The financial Accounting Standards Board decided to delay a decision that would make a certain type of pension plan more of a burden to companies' balance sheets. It says it needs more time to study the rule change and plans to revisit the issue as early as next month. The proposed change was opposed by major companies, including Allstate Corp., Citigroup Inc., and State Street Corp.


Top retirement funds plan to jointly push reforms (May 28, 2003)

To further push poorly run companies to adopt new corporate governance reforms, several of the world's largest retirement funds are negotiating to act collectively. The roster of funds include the New York State Common Retirement Fund, and CalPERS, California Public Employees Retirement System, may also sign on.


FASB Rule Shift Could Increase Companies’ Pension-Plan Costs (May 28, 2003)

The Financial Accounting Standards Board is considering a change in the accounting rule, which could make a certain type of pension plan more burdensome to companies’ balance sheet. Under the change, employers would use a lower interest rate to calculate this obligation in present-day terms. Companies and pension-plan advisers are resisting the move, saying it could lead to reduced benefits.


Aetna Agreement With Doctors Envisions Altered Managed Care (May 23, 2003)

Aetna, the big health insurance company, and medical leaders reached an agreement to settle a long-running lawsuit over billing and medical decisions. They promised a radical change in their often difficult relationship and better treatment for patients with the agreement in place. Aetna said that it intended to provide clear information on coverage, speed payments, and reduce red tape.


Retirees protest pension cuts: Struggling Special Metals puts benefits under scrutiny (May 21, 2003)

Carrying signs, some which said "Special Metals Corp. Management Got the Gold Mine. Retirees got the Shaft," retired workers backed by their union representatives led an informational picket Tuesday against Special Metals' proposal to eliminate its pension program. The picketers, most who worked for Special Metals anywhere from 25 to 40 years before retiring, hoped the protest in front of the Middle Settlement Road plant would bring attention to what they believe is the company's mistreatment of its retirees.


Heard Off the Street: Watch out as pension losses mount but appear as gains (May 19, 2003)

Here's one reason why millions of workers are worried about retirement: 320 members of the Standard & Poor's 500 paid out pension benefits equaling 8.5 percent of their pension plan assets last year. At the same time, they replenished those plans with contributions equaling only 4 percent of the assets in their plans. The sobering statistic is contained in a study released last week by Wilshire Associates, an investment advisory firm. Senior managing director Stephen L. Nesbitt, the author of the report, says 2002 was the worst year ever for corporate pension plans.


U.S. bill would encourage long-term care insurance (May 15, 2003)

As 77 million "baby boomers" march toward their high health spending years, two U.S. House members Wednesday introduced legislation that would encourage them to purchase insurance to cover the costs of long-term health care -- something most private insurance plans and the Medicare program do not cover.


A Retired Steelworker Struggles With a Health-Insurance Crisis: How the Ailing Industry Broke Promises From the Past to Remain Afloat Today (May 12, 2003)

Chuck Kurilko, a retired steelworker of LTV Corp in Pennsylvania, faces a tough decision regarding health insurance, as LTV broke promises from the past with industry restructuring. After laboring at LTV Corp. for 37 years, Mr. Kurilko is left wit heart disease and a monthly $2,864 fee for health insurance. LTV, along with much of the rest of the steel industry, has been restructured and Mr. Kurilko's health benefits are a casualty.


Study: Pension in Grave Trouble (May 12, 2003)

According to a new study from HSBC Bank, large U.S. corporations face severe shortfalls in their pension plans that may be even worse than expected. Pension plans were only 84 percent funded for companies in the Standard & Poor's 100 index at the end of fiscal year 2002. This translates into a combined pension shortfall of $93 billion for S&P 100 companies that provide defined-benefit pension plans.


Pension funding withers (May 9, 2003)

Nearly every publicly traded company based in the Milwaukee area has seen the pension funds continue to wither in a weak investment market. Although most companies can afford increasing their contributions to defined benefit plans in the short run, the sluggish economy and corresponding stock market slide could lead to a reduction in future benefits paid out to employees. The funding issue has worried retirees and current employees of companies with defined benefit pension plans.


Global Investing: Preventing a private pensions meltdown (May 8, 2003)

As the baby boom generation nears retirement, the US system of pension and tax-preferred savings is facing its own nemesis. Only half the workforce is covered at any one time, the system is complex and its impact on national savings and the adequacy of personal pension provision is suspect despite the drain it imposes on the US Treasury.


Companies face gaps in pensions (May 7, 2003)
After watching a decade of pension surpluses vanish in three years, the nation's biggest companies are struggling to fill a gaping hole in their pension plans. The hole is $216 billion deep -- a shortfall of $13,600 per covered worker. Most older workers and retirees don't need to worry that they won't get their pensions, however, because their companies have enough money and time to plug the gap. The main exceptions are some higher-paid workers at companies bordering on bankruptcy, such as airlines, who could lose some of their pensions.

Airlines Seek Right to Put Off Catch-Up Pension Contributions (May 06, 2003)
The financially struggling airline industry is quietly seeking legislation that will allow commercial airlines to put off making any catch-up contributions to their underfunded pension plans for almost five years. The industry, suffering its deepest ever recession, has repeatedly sought help from the federal government, including relief after the Sept. 11, 2001, terror attacks. More recently, Congress included in the war-spending bill passed last month aid for the industry totaling $3.8 billion in cash grants and other assistance.


Lawsuit accuses Sprint of mismanaging retirement plans (April 29, 2003)
In a complaint filed last week in U.S. District Court in Kansas, the plaintiffs, Robert K. Fries and Fran Lindholm, both of Arizona, and Anton P. Spanier of Nevada, said Sprint and the committees and individuals who oversaw the company's retirement plans breached their fiduciary duties and "are personally liable" to make good on the resulting losses.The lawsuit alleges that the company and individual defendants were negligent for permitting retirement plans to include Sprint's FON and PCS tracking stocks as investment options and for investing the retirement plans' assets in the stocks after they were no longer "prudent" investments.  

Executive Pensions Often Secured First (April 27, 2003)
A number of large companies are setting aside millions of dollars to protect pensions of top executives, even as they forgo contributions to financially strained pension plans for other workers. The issue of inequity in pension plans is heating up in the airline industry, amid recent disclosures that AMR Corp., Delta Air Lines and UAL Corp. had poured millions into special pension trusts for executives. That angered workers whose pension plans have been ravaged by weak stock markets and low interest rates.

Special Metals might cut pensions (April 27, 2003)
Special Metals Corp. likely will terminate its pension plans soon, leaving hundreds of people in the area worried they might have to live on less. In a letter for employees and retirees mailed last week, T. Grant John, president of Special Metals, said pension funding obligations are $42 million more than previously expected. The pension obligations would prevent the company from emerging from Chapter 11 bankruptcy protection, the letter said. What happens to the pension plans?


Pensions hit Bank of New York profits (April 16, 2003)

The Bank of New York on Wednesday said its first-quarter earnings had fallen 19 per cent due to weak economic conditions and higher expenses from revising employee pensions.

Protected pensions for AMR’s executives (
April 16, 2003)
A special trust set up by American Airlines’ top executives will allow them to collect retirement benefits regardless of whether the airline goes bankrupt, according to documents filed by the company.
The trust covers the pension packages of American Airlines’s parent AMR Corp. Chairman and CEO Donald Carty and 44 of his top executives.

CEO Pensions: The Latest Way to Hide Millions (April 14, 2003)
Earlier this month, soon after Delta Air Lines disclosed that CEO Leo Mullin had hauled in a bonus of $1.4 million plus $2 million in free stock in 2002, howls of protest from shareholders and employees prompted a dramatic turnabout. You see, Mullin has been employed by the airline for only five years and eight months. But a special pension plan that Delta's board created for top executives has credited him--shazam!--with another 22 years of service. Another hand in the company till!

Feds Take Over US Airways Pension Plan (April 1, 2003)

The government's pension protection program assumed control of US Airways pilots' underfunded pension plan, but only will fund about a fourth of the losses. That means significant cuts in retirement pensions for the 6,000 pilots of US Airways, which emerged from bankruptcy protection.


Distribution of retirement income benefits (April 2003)

Lump sums have become more popular as an alternative to annuity payments in defined benefit retirement plans and remain the prevalent distribution option in defined contribution plans in the U.S. private industry. The article explains the defined benefit plans and defined contribution plans respectively. It also provides several distribution options for each type of plans.


The Complicated Calculus of Stock Options (March 30, 2003)
It is not easy to choose the company in which to invest your money. But the different methods used by corporations to compile their financial statements make it even more difficult and unpredictable.


Judge Says Enron's Staff Must Cover Pension Fees (March 24, 2003)
The federal judge overseeing the bankruptcy of Enron ruled on Friday that the company could not pay fees to an independent overseer of three retirement plans for current and former employees. Instead, the judge said, participants in the plans must pick up the costs themselves.


Rule lets companies turn pension losses to gains (March 24, 2003)
Verizon Communications Inc., Lockheed Martin Corp., IBM Corp. and six other companies each lost more than $1 billion in pension-fund investments last year, while reporting pension gains in their income statements in annual reports. Rule makers are now calling for reforms in how businesses account for their retirement plans.


Lies, Damn Lies, And Lies to Older Workers

Mark Twain coined the phrase "lies, damn lies, and statistics" as a critique of official numbers that often deceive. This poem applies the same sentiment to official promises given older workers.


Getting Ready for the Bills (March 18, 2003)
People who are thinking about early retirement can benefit by examining the most recent copy of their employer's benefits statement to see what health coverage they will get and what it will cost.


Az. pension funds tied to terrorist allies (March 17, 2003)
The stock and bond holdings of seven Arizona public retirement systems and the State Compensation Fund have at least $1.1 billion invested in companies doing business in countries identified by the U.S. State Department as sponsoring terrorism, the East Valley Tribune reported.


How healthy is your company's pension plan (March 17, 2003)
Yet it seems that every day another company is in the news because its pension is seriously under-funded. General Motors, Ford, IBM and Boeing are among the hundreds of companies faced with finding cash to pump into under-funded pension plans. If you are relying on a traditional pension plan, this article helps you to keep an eye on your company's financial health.


Politically connected get millions in Philadelphia pension fund cases (March 16, 2003)
Two Philadelphia law firms got $19 million to represent the city pension fund and other ailing investors in a series of successful class-action lawsuits.


A Fiscal Train Wreck (March 11, 2003)
The Congressional Budget Office estimates that the 10-year deficit will be at least $3 trillion.  In an editorial, economist Paul Krugman lays out some of the financial consequences of “banana republic” fiscal policies that will hurt lots of citizens but take a heavy toll on older persons.


HealthSouth Reports $406M Quarterly Loss (March 3, 2003)
HealthSouth Corp., under review by the Securities and Exchange Commission and the FBI, lost $405.8 million in the fourth quarter as a cut in Medicare payments helped send the rehabilitation company into the red. It will lay off about 1,000 of its 50,000 employees because of the cut in Medicare payments.


U.S. pensions lost $1 trillion in last 3 years (February 28, 2003)
U.S. retirement plans for public employees, corporate pensions and endowments lost $1 trillion in the last three years. This news survey made by Greenwich Associates found that “many retirement systems sank because of wrong assumptions made about how long retirees will live and how much money will be needed to pay them.”


US Airways, Pilots Argue Pension Plan (February 28, 2003)
The pension issue is the last major problem for US Airways in trying to escape bankruptcy by March 31. The only way to avoid it is to terminate the plan which provides benefits to 8,000 active or retired pilots: $ 800 million would be saved according to the executive directors. Isn't the business of retirement programs to track demographic changes and invest accordingly?

Bush's Plan for Pensions Is Now Given Low Priority (February 26, 2003)
The White House has abandoned the idea of a radical expansion of individual retirement and savings accounts as a legislative priority. But the proposal is not dead. Mr. Bush's long-term goal remains to remove most taxes on investment income. The plan would also increase the amount of money people can contribute to individual retirement accounts.



Out of the Firehouse, Into a Richer Retirement (February 19, 2003)
There are 1,293 New York City firefighters who retired in 2002. With at least 20 years of civil service to their credit, the firefighters were eligible to leave with a full pension of half their salary. But “retiring because of money is not a good reason to retire” said a former fire captain.

  Bush Rallies Republicans Around Tax Plan (February 10, 2003)
President Bush urged Republican members of Congress to rally him behind his proposed tax cuts. Some Republican leaders expressed their concern over trying to cut taxes only when the federal deficit is back on the rise. Other difficulty for the US President will be to sell the idea to the elderly to leave the traditional Medicare program to qualify for the drug benefit. 

Loss of Safety Net a Blow to Bethlehem Steel Retirees (February 10, 2003)
Bethlehem Steel announced February 8th the end of its payment for medical aid and life insurance premiums to its 95,000 pensioners and their families. This measure will allow the company to save 3 billion dollars and have more “attractive assets” for sale to International Steel Group (ISG). The American steel industry counts less than 200 000 employees and more than 600 000 pensioners today.  This terrible blow for steelworkers shows the vulnerability of pensions tied to a company’s fortunes.  When can US workers get an independently managed pension for them and not for the company’s benefit?  For a model, see TIAA-CREF, the university workers’ pension.

Pension Costs May Widen Budget Gap in New York (February 8, 2003)
$ 1.1 billion: the New York budget gap could be $700 million larger than the Pataki administration had predicted ($400 million). This state pension fund is the second largest in the nation and serves about 945,000 participants.  The bad news comes after the election!

Down and Out in America (February 5, 2003)
A potential war on Iraq would cost billions, and the US poor would pay the price. Already, the Bush administration has cut social services in the name of tax breaks and “security,” resulting in increased poverty, higher unemployment, larger class sizes, and wider inequality.

Retirement Plan May Strip Some Employee Protections (February 4, 2003)
The new employer-sponsored retirement savings plan revealed as part of the Bush budget could remove most of the rules designed to keep employer plans from favoring highly paid employees.  Overall it could mean less retirement savings for lower-income people.

Quit double-taxing seniors (February 4, 2003)
Here is Larry Craig’s point of view about the tax problem for the elderly. In this Washington Post extract, the Republican senator,
claims that older Americans are being literally triple-taxed "to death." Seniors pay federal and state income taxes on Social Security payroll taxes during their working years and then pay taxes on their Social Security benefits when they retire.” He also supports believed in Bush’s propose on dividends that will increase “incentives for Americans to save for their own retirement.” He fails to say that the rich win big his proposal.

New 401(k) Tool, but Who Needs It? (February 2, 2003)
By 2002, 11 percent of large companies included brokerage accounts in their 401(k)'s. Self-directed accounts are expected to be offered in nearly one-third of all retirement plans by 2006, according to Cerulli Associates, a financial services firm in Boston. The great majority of employees don’t use the accounts.

Details Given on New Plans to Aid Saving (February 1, 2003)
The Bush administration unveiled its plan to create two new types of savings accounts. But one fears that senior officials of companies — particularly small companies — do not set up retirement plans for their workers and direct most of the benefits to themselves, creating abusive tax shelters.

Pension Insurer Cites $3.6 Billion Deficit and Suspects Worse (January 31, 2003)
The Pension Benefit Guaranty Corporatio
n, the federal agency that provides protection to 44 million Americans retirees in case of a corporation failure, reported a $3.6 billion deficit, larger than expected. The greatest blow to the pension agency was dealt by the steel industry.

Drug Sales Bring Huge Profits, and Scrutiny, to Cancer Doctors (January 26, 2003)
The cancer specialists can make a lot of money from the difference between what they pay for the drugs and what they charge insurers and government programs. Drug companies have also been accused of using discounts to influence doctors who buy themselves the drugs before they administer it to their patients. But things are going to change a little bit: for example, Southeast and Southwest insurers are looking to buy the drugs directly.

$8 Billion Surplus Withers at Agency Insuring Pensions (January 25, 2003)
The Pension Benefit Guaranty Corporation is expected to disclose a deficit of $1 billion to $2 billion. Big pension plan failures show no sign of stopping this year as US Airways’ reorganization plan proves.

Effort to Dilute New SEC Rules (January 22, 2003)
An onslaught of lobbying by powerful law firms, accounting firms and trade groups may have succeeded in softening the Securities and Exchange Commission’s new proposed regulations. According to SEC officials, many of the toughest proposals to prevent Enron-style scandals “appear to be dead, watered down or postponed.” Honesty and transparency is in short supply.

I.R.S. Faults City Dealings on Pensions (January 20, 2003)
The Internal Revenue Service found that the New York City withdrawal of$177 million over seven years from municipal pension systems was a violation of the tax law which says pension funds must be “operated solely for the benefit of participants.”

The Unmanaging of Health-Care Costs (January 17, 2003)
This article from the Los Angeles Times is a personal opinion from a political economist about the ”U.S. workers' unrealistic demands.” The author believes that the “juvenile”American people want money for health care and this is the same money that can't be spent for higher wages or higher pensions.

Just Don’t Call It “Class Warfare”( January 16, 2003)
As the Bush administration promotes a new “economic stimulus” plan that would put money back into the hands of the obscenely wealthy, it is also stiffening up “welfare to work” requirements, cutting back on social services, and pursuing an extravagantly expensive campaign against Iraq. This ZNet article calls it by its name: a war on the poor.


Why the Rich Have Been Paying More Taxes? (January 14, 2003)
Incomes have gone up for the rich lots more far than for the average family. As a result, the share of taxes paid by the rich has gone up over the past twenty years as it is shown in this booklet from the Century Foundation.

Official: US Airways Risks Pensions (January 14, 2003)
US Airways, the nation's sixth-largest airline, was the first to file for bankruptcy during the travel industry slump following Sept. 11. A plan to help bail US Airways out of bankruptcy by extending its employee pension payments would risk retirement security for 44 million Americans.

Companies Fight Shortfalls in Pension Funds (January 13, 2003)
Many major American companies are spending large amounts to shore up pension plans that have deteriorated, sometimes drastically. For example, the biggest pension shortfall belongs to General Motors with a deficit of $19.3 billion. G.M. also said its pension costs would triple in 2003, severely depressing its profit. Companies hope that the government will help. But these problems have little to do with any change in the number of people retiring, or an increase in their benefits. Rather, the companies failed to make safe investments during the ‘bubble’ years and squandered their workers’ income security in old age.

Retirees Returning to Work Should Heed Medicare Rules (January 12, 2003)
The massive stock losses are creating major problems for some older adults. Some are obliged to postpone their retirement programs. Some of them decide to go back to work after retirement. This decision may affect their Medicare benefits.

Aujourd'hui, il faut aider les riches (January 11, 2003)
Here is an American “trickle down” theory perspective on the Bush administration’s tax project published in a French newspaper: “ Nowadays, it’s necessary to help the Rich”.

Tax cuts as 'stimulus' - a global reality check (January 10, 2003)
By international standards Americans are relatively lightly taxed. Here is an article to explain all the facts of the tax
issue in other countries especially in Europe where the range of progressivity is greater.

The Bush Plan: A Global-Scale Disappointment (January 10, 2003)
This author argues that President Bush economic plan not only disproportionately benefits the US rich, but also reflects an unwise approach to the global economy. Instead, promoting fair trade with the developing world, and investment in poor countries social development, would generate wealth both in the US and around the world.

G.M. Warns of $2 Billion in Added Expenses From Pensions (January 10, 2003)
General Motors said that expenses related to its pension plan would triple from $1 billion to nearly $3 billion this year.  Because of the weak performance of the financial markets, the company's pension liabilities exceeded the plan's assets last year by $19.3 billion, compared with a gap of $9.1 billion the year before. If that becomes too wide, companies are required to pay penalties to a government agency. To avoid such payments, G.M. contributed $4.8 billion to its pension plan last year.

GE Employees to Strike Over Health Care (January 8, 2003)
As many as 20,000 employees of General Electric Co. will go out on the first national strike at GE since 1969. Union officials said the health care co-pay increases would cost the average worker an additional $300 to $400 annually. Older workers will be especially hard hit because they rely on prescription drugs and other medical services. Temperatures glaciales....pour ce soir,regardez moins 13 mais avec vent ca fait moins 18, cest le "feels like... "ce kon ressent

Why Not to Eliminate Taxation of Dividends (January 8, 2003)
The Bush administration has proposed eliminating corporate stock dividends from taxable household income. Global Action agrees with this comment from the Century Foundation: "this proposal is yet another tax break for the rich being sold as tax reform and a stimulus measure."

The Charles Schwab Tax Cut (January 7, 2003)
A New York Times engaged article about the Bush administration new plan to eliminate the tax on dividends that will cost the Treasury about $300 billion. A Global Action on Aging observer says that it is a change that should be made. But that at the very least it should be accompanied by an upper bracket tax rate increase scaled to offset the effect of the dividends being excluded from personal income taxation. She was not optimistic about more taxes on the upper bracket under this president.

Now Corporations Claim the Right to Lie (January 7, 2003)
Nike will defend itself in a lawsuit accusing the company of deceptive advertising by trying to prove that it has a constitutional “free speech” right to lie. Kasky vs. Nike will test the limits of “corporate personhood,” with enormous implications for democracy and corporate power in the US.

Been Down So Long, You Call This Up? (January 5, 2003)
The fourth quarter of the year 2002 was a good one for stock mutual funds, but the market declined so sharply in the nine previous months that the 2002 was the worst year for stock funds since 1974.