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Pension Plans

In: Business and Management

Submitted By boopsie1
Words 2591
Pages 11
Running Head: Pension Plans

Abstract

The goal of pension plans is to provide a fixed income for individuals during retirement. In practice, this means either paying employees a fixed income when they reach a predetermined retirement age or can no longer work due to disability (Dessler, 2005, p. 492). However, since the 1980’s the number of employers offering pension plans has declined. Once considered a common benefit in the workplace and motivator for senior employees to remain with the organization, private pension plans has drastically dropped 74 percent (Carrell & Heavrin, 2007, p. 329). This research paper will first explain how pension plans are classified and then identify several reasons why pension plans has declined. Moreover, it will discuss which pension plans are in use today, and finally, what regulations govern pension plans.
Private Pension Plans: America’s Vanishing Benefit When one company after another reneges on its pension obligation toward current and future employees, you know it’s going to get ugly. Just ask any veteran employee of a major airline who may only receive half the value of his/her pension upon retirement. Walsh (2004) reported that United Airlines’ pension payment debt nearly topped $23.4 billion along with another $1 billion for retiree health care benefits (para. 11). In other words, pension payments have the potential to basically bankrupt an industry. How should companies challenge the rising cost of retirement without jeopardizing commitment with their employees? Is this threat to pension plans only limited to airline industry, or will it affect other major industries? It’s a fact; the severe downturn in the financial markets had major adverse effect on pension plan funding. And if this trend continues, private pension plans may vanish indefinitely. Today, workers are concern and

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