As I sat reading the Sunday paper yesterday, I found an article that talks about Motorola cutting out their pension. Approximately two years ago, Motorola stopped offering pensions to new employees. Now, they are changing the way the benefits are calculated for current employees which will result in smaller pensions for 24,000 of their workers. Just one more example of why we each have to look out for ourselves.
The article also points out other companies that have started reducing or have cut out their pension benefits altogether. They mention Lockheed Martin, Hewlett Packard, IBM, Coca-Cola, and Circuit City as well.
Unfortunately, this is just the new reality. As newer companies come online and take a dominant position in the market, they force the older, more tradtional companies to change or die. If companies like Dell don’t offer pensions, how can Hewlett Packard compete on price, if they have much higher overhead? It’s not just US based companies that are part of the equation either. Our US companies are now competing with other companies all over the globe. In many of these countries, companies aren’t saddled with pension obligations or employee health insurance. While I think it sucks, I understand the harsh situation. The days of monthly payments from your company after you retire are winding down.
I used to joke that I longed for the day that my only responsibility was to walk down the driveway to open up the mailbox and take out my check each month. I think I’m going to have to modify that dream a bit. Instead, I think I’ll long for the day that I can log on to my 401K account, or Roth IRA, or brokerage account and transfer some money in to my credit union’s checking account. I guess the one upside to this is that I don’t have to walk all the way down the driveway.