Employers are drastically slashing bonuses, severance packages and pay raises next year to cut costs amid mounting concerns of a prolonged economic downturn.
Cuts are being made in all areas:
•Lower pay raises.
•Bonuses are shrinking, too.
•Other cutbacks. Raising employees’ contributions to health care.
SOURCE: USA
The struggling electronics company’s decision to suspend payments to its US employees’ 401(k) pension accounts comes a week after Xerox took a similar step. Both companies described the moves as temporary, though they made no promises about when, or if, they would be able to reinstate the payments.
Other companies to drop the pension payments in recent months include General Motors, rental car company Dollar, and real estate firm Cushman & Wakefield.
Motorola also said it would freeze its US defined-benefit corporate pension plans permanently, and that it would only make payments into the plans in future to ensure that existing accrued benefits were maintained.
The latest step means that Motorola pensions paid out of these plans will be based only on present salary levels, and future retirees will not see any topping up to reflect pay rises during the course of their careers.
The rapid erosion of defined-benefit plans has left American workers increasingly reliant on their 401(k) accounts, which are based on the value of their own contributions.
The vast majority of companies also make their own matching contributions to these accounts, though most 401(k) rules are written in a way that gives companies the right unilaterally to scrap the payments.
Dropping the 401(k) contributions could save Motorola $80m a year, based on its payments in 2007.
SOURCE: FT
Not looking so good for people with or without a job! I sure can not wait until Obama sits behind that desk and takes the heat from what the democratic control congress has done since they took control! Their Fed wage increase did more damage than good. And they want to raise taxes on companies still. The American people will be without jobs, some with less paying jobs, and some that will not have a retirement plan to look forward to and some with no more paid benefits such as baby sitting. Hurry up Obama get in there so we can tell you how we feel about the democrats and their taxes!
