Monday, January 12, 2009
Pension plans may not be in as bad shape as are many 401K's
I’ve covered the way the Pension Benefit Guaranty Corporation works before (Nov. 2008), but on Jan 11 the Business Section, p F05, of The Washington Post ran an article by Nancy Trejos, “Your Company’s Fund Is Bruised, but Don’t Worry,” link here.
One study found that 360 of 500 Fortune 500 companies had underfunded defined benefit pension plans. The article says that if your plan was terminated in 2008 and you are 65 or older, you could still receive up to a maximum of $51,750. The article suggest that you can find a Form 5500 for your employer at the webstie FreeERISA (which offers some additional subscription options). Schedule B of the form will show if the total benefits liability is greater than the assets, showing underfunded status. There is an issue that companies don’t have to file until almost a year late, so the effects of the 2008 meltdown may not show up yet.
Bruce Sneed, of BK Sneed Financial Planning in Woodbridge, VA, is quoted as saying that people now should plan to work until age 72 to 75. If only employers were that accommodating. The comment is especially scary because Barack Obama has been hinting at huge cuts in entitlement programs, possibly even cutting existing benefits, to reduce the cost of the economic stimulus package to put (younger) people back to work.
Picture: NBC4 Health Fair, Washington DC; sorry that the camera got out of focus somehow.