Asurea: Building YOUR Retirement Knowledge Bank
At Asurea, we view it as our responsibility to build your retirement knowledge bank with actionable solutions substantiated by research. In this 2-Part Pension Series, we analyze pensions as a whole, public and private sector pensions respectively, and COVID19’s effects on both. Part 1 focused on public sector pensions. Here in Part 2, we’ll consider private sector pension trends, scrutinizing General Electric in a case study of their pension phase-out.
Private Sector Pensions Closing Up Shop
In October, 2019, General Electric joined the vast majority of American companies in accelerating their pension phase-out. They froze an estimated 20,000 salaried American workers’ pension plans, according to The Wall Street Journal. The company planned to offer pension buyouts to a further 100,000 former employees who had yet to start taking monthly pension payments. Further, GE froze the plans of an estimated 700 employees who held supplemental pensions. These primarily targeted executives. Since 2012, their pension plan has not accepted new entrants. The changes were not expected to affect retirees’ pensions already in distribution status, the company assured retired workers.
“Returning GE to a Position of Strength” by Freezing Pensions
GE Chief Human Resources Officer, Kevin Cox told MarketWatch, “Returning GE to a position of strength has required us to make several difficult decisions, and today’s decision to freeze the pension is no exception… We carefully weighed market trends and our strategic priority to improve our financial position with the impact to our employees.”
Pension Closures Common Trend; Changes Must be Made
By phasing out guaranteed retirement, GE joined the vast majority of U.S. manufacturers.
While COVID19’s impact on public pensions (already in a downturn) is still unfolding, the private sector’s response to its challenges has largely been a close-up-shop approach to pensions. The vast majority of American companies have ended pension funding altogether. The rest are in the process of phasing pensions out at a pace metered to avoid abruptly disrupting participants’ lives, and the consequent public fallout. How the public sector pension managers will respond has yet to be seen.
What we definitely know is that changes must be made.
You CAN Take Action!
This latest bad pension news shows, yet again, how crucial it is that we take charge of our retirement planning, independent from employers. and DIVERSIFY. Pensions cannot be taken for granted, not even from historically reliable employers such as the government, or private sector anchors like GE. Increasingly, well-diversified portfolios include non-traditional funding.
Are you prepared? The answer is probably, “No,” if your retirement funding isn’t diversified into life insurance, annuities, and a comprehensive debt elimination program such as the Debt-Free Life program.
To partner with a broker who’ll help you balance and diversify your retirement, contact Asurea.
Asurea: Securing Your Future for Generations to Come!