Aug. 16, 2006 - 22:09 MDT

OLD SCAM

Sad bit of news today in the Rocky Mountain News. An article written by Ellen E. Schultz of The Wall Street Journal gives us this news, quoted in full:

COURT RULING ALTERS PENSION LANDSCAPE

"If you're covered by a traditional pension plan, the odds that your employer will change to a "cash balance" pension plan have just increased."

"These new-style pensions, which cover roughly a quarter of the 22 million private-sector workers with pensions, have been controversial because switching to them reduces pensions for older workers -- some times significantly. This has led to lawsuits and proposed legislation to slow their spread, causing some employers to hesitate about changing."

"But last week, a federal appeals court ruled that International Business Machines Corp.'s cash-balance pension didn't violate age-discrimination laws."

"Just days before that, Congress approved a measure that would deem cash-balance plans legal. While the ruling will be appealed and the bill has yet to be signed into law by President Bush, employer groups say the recent actions are a green light for employers to change their pensions."

"For employers, switching to a cash-balance pension plan reduces future payouts and boosts earnings. That, in turn, can result in big gains in executive incentive pay, which is tied to earnings."

"Researchers at Cornell University, the University of Colorado and the University of California at Irvine examined hundreds of companies that converted their pensions to a cash-balance formula, and they found that the average incentive compensation for the chief executive officers jumped to about four times salary in the year of the pension cut, from about three times salary the year before>"

"For example, filings show that when Cooper Tire & Rubber Co. converted its pension to a cash-balance plan in 2002, the CEO's incentive pay rose to $1.5 million -- the highest level in a decade -- from $702,000 the year before."

"A spokesman for Cooper Tire called any correlation between its CEO's pay and its pension changes "completely coincidental."

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Stranger and stranger . . . . "incentive compensation" is something the biggie execs get on top of their salary, do I have that right ? I remember my factory days and piece work. Every time a person would develop a shortcut to increase the output and thus get a few bucks extra -- out would come a time study man and the piecework rate would go down, after that the poor bugger had to jump through it to survive. That's incentive compensation for us working Joes.

One thing I do not like about this article is the fact that the writers did not spell out what a "cash-balance" pension actually is and how it is figured. I does seem to me that such information should be included in the article for the benefit of ignorant men like me. Guess I'll have to Google around and see what's there in the cash-balance pension dictionary.

It seems to me that when a man or woman retires, their pension should remain what was promised to them to begin with. And most pensions don't even have Cost Of Living adjustments to boot.

I retired in 1990 and the pension I get now is the same as it was in the beginning, but my money doesn't buy as much or as many things as it did when I first retired. I don't care how the experts disguise it, prices have gone up for everything. Some of it is hidden, what used to be a pound package is now 12 ounces or less, sneaky way of raising prices. They seem to think we don't notice things like that.

Barring any startling news from Google on "cash-balance pensions," it would appear that they are the new words for an OLD SCAM . . . . . . . . . .

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