Right after the Pension Protection Act of 2006 was passed, I read comments that the new Act would help employees by removing uncertainty about funding, and it would avoid pension plan terminations and freezes.
Not!
A Quick Poll recently released by SEI revealed that almost a third (29%) of the employers polled said that they will either close, freeze or terminate their pensions by the end of 2007. If that were to occur, 52% of all US and Canadian plans polled will be closed, frozen or terminated by the end of 2007.
We can expect to see freezes become much more common in the last quarter of 2006 as employers prepare to comply with new accounting rules that put pension obligations directly on their balance sheets.
The emergence of pension plan freezes (a cessation of future benefit accruals in an existing pension plan) apparently engendered the Pension Villain’s Elegy on the Pensions & Benefits Weblog.
The risk’s not worth the burden. Time to freeze.
But not to worry: we have a great 401(k)!
This cut will benefit our employees.FAS 158 gives our balance sheet the squeeze
While our cash projections wobble from PPA.
The risk’s not worth the burden. Time to freeze.Our workers need to be their own trustees.
Just educate them; they’ll learn to find their way.
So this cut will benefit our employees.Our old plan’s tangled up in legalese.
The DB pension system’s seen its day.
The risk’s not worth the burden. Time to freeze.Our competition’s boosted their DCs,
And what works for Wall Street’s good for the U.S.A.
This cut will benefit our employees.We know you thought we promised more, but please,
Eventually as a hybrid plan we may.
The risk’s not worth the burden. Time to freeze,
And this cut will benefit our employees.
Should we benefit people start using the term 401(k)world instead of Pensionland?
