Benefits October 28, 2011

Employees More Aware of Financial Future Responsibility

October 28, 2011 (PLANSPONSOR.com) – A 2011 Q3 survey by Financial Finesse finds U.S. employees are more aware their financial futures are in their own hands, with less help from government and employer-sponsored benefits.  
Reported by

An increase in questions on retirement planning from 26% in Q3 2010 to 34% in Q3 2011, coupled with retirement plan participation rates self-reported at 91% year-to-date, offer evidence that employees have increased awareness of their need to be more self-reliant when it comes to saving for retirement.

Employees are remaining calm about their investment strategies, despite recent drops in the stock market. The percent of questions Financial Finesse received about investing only increased slightly (from 12% in Q2 to 14% in Q3) in comparison to the recent 14.3% decline in the S&P 500 and an overall tumultuous quarter.

Get more!  Sign up for PLANSPONSOR newsletters.

Employees’ financial stress is decreasing as employees continue to improve their cash management skills. The number of employees reporting high or overwhelming financial stress is down from just over 32% last year to just under 21% year-to-date for 2011. In addition, just under 16% of employees report having no financial stress, up from about 3% of employees in 2010.

Liz Davidson, CEO and Founder of Financial Finesse says these and other findings from the report indicate that employees have shown a high level of resilience in the face of a difficult economy.

“Employees are not burying their heads in the sand,” she said, in a press release. “They have accepted that this is the ‘new normal,’ and they’re persevering through it. I’m really impressed with how they are rising to the occasion. They’re seeking education and continuing to take the right steps to improve their finances rather than giving up.”

Davidson warns, however, that U.S. employee retirement preparedness remains dismally low, with just 15% of employees year-to-date reporting they are on track to replace 80% of their income (or their goal) in retirement.

“While employees are definitely moving in the right direction, the landscape is shifting at a faster rate than employees are compensating for,” she added. “All the dynamics of rising inflation, higher tax rates, fewer companies providing monthly pension income to retirees, and depleted home values are coming together in a perfect storm that will require even more from employees than what they’re doing now in order to have a secure financial future.”

Compliance October 28, 2011

PBGC Sues Auto Parts Supplier over Pensions

October 28, 2011 (PLANSPONSOR.com) - The Pension Benefit Guaranty Corporation is suing Bendix Commercial Vehicle Systems LLC for $16.6 million to cover pension debt from the closing of its Frankfort, Kentucky, plant.
Reported by

A PBGC announcement noted that federal law requires companies to provide financial protection when more than 20% of a pension plan’s members lose their jobs in a shutdown. All the Frankfort plant’s 63 workers were displaced after it closed in December 2007.  

“Bendix continues to ignore its legal responsibility to these workers,” said PBGC Director Josh Gotbaum, in the news release.   “We’ve tried to work with them in good faith, but now we have no choice except to take them to court. Make no mistake:  PBGC will use every legal means to protect pensions.”     

For more stories like this, sign up for the PLANSPONSOR NEWSDash daily newsletter.

PBGC filed its lawsuit in the U.S. District Court in Cleveland on September 16, 2011, after Bendix declined to meet its obligations. The action against Bendix is the first time PBGC has had to go to court to compel a company to cover pension obligations from a plant closing, the announcement said.  

Until now, companies that closed plants have worked with PBGC to settle their pension debts. Since 2007, PBGC has obtained more than $1 billion in additional protection for pension plans covering more than 120,000 workers and retirees.  

Bendix, which supplies brakes and vehicle control systems for trucks and commercial vehicles is headquartered in Elyria, Ohio, and owned by Knorr-Bremse AG of Munich, Germany.

«