Since GE is following the trend in Healthcare now, will they follow it in Pensions in the immediate future?

In our organization, our Ancien Hippie is actually a General Electric Pensioner, but he wanted me to write the article so it would be unbiased (besides he wanted to cover the Comets game.) His only comment (I could publish) was “hope it is not a disaster like the 401K.

This article describes the trend in Pensions. It is interesting to note that Towers Watson is mentioned since they have provided the counsel on healthcare and are managing the GE program via their subsidiary, OneExchange

AARP THE MAGAZINE
The Great Pension Sell-Off

Should you take a lump sum or an insurer’s annuity? by Eileen Ambrose, AARP The Magazine, June/July 2014

Carl Monheit’s former employer reliably mailed his monthly pension check to him for 17 years. A year and a half ago things changed. The Hackensack, New Jersey, resident, along with thousands of other retired managers, learned he would no longer be part of Verizon’s pension plan. Instead, the telecommunications giant bought them an annuity. While payments would stay the same, future checks would now come from an insurance company.

“It was kind of a shock,” says Monheit, 67, who retired after 30 years from a company that became what is now Verizon. “Why are they changing things that worked for so many and worked well, and provided so much comfort and security to people who built their business?”

It’s a question more retirees and older workers likely will be asking as U.S. companies move to get expensive pension obligations off their books. Companies call this new approach “de-risking.” Some firms purchase annuities for their pensioners, while others offer cash to buy them out. And some — most notably General Motors in 2012 — try a combination: first offering a lump sum and then buying an annuity for those who don’t take the money.

A report by benefits consultant Towers Watson last year found that 58 percent of companies surveyed had offered lump sums to former employees or plan to do so, while 38 percent expect to transfer pension obligations to an outside company within the next five years.

Story by Bill RothschildFounder and CEO Rothschild Strategies Unlimited, LLC

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