Pacific Grove, CA General Motors Offers 42,000 Workers Pension Buy-Outs, Insures 98,000 More With Prudential: How Safe Is Your Retirement Fund? View From A Private Duty Caregiver Serving Carmel, Carmel Valley, Carmel-by-the-Sea, Gilroy, Gonzalez, Greenfield, Hollister, King City, Marina, Monterey, Pacific Grove, Pebble Beach, Salinas, San Juan Bautista, Seaside And Soledad California
The state of the stock market and the stability of many corporations has many retirees which are receiving pensions on edge. I remember when Pacific Gas & Electric (PGE) went bankrupt. There were many retirees in Carmel and Monterey which were living off of their retirement checks from PG&E and never envisioned that the local power company could go bankrupt. But it did. It was the third largest bankruptcy in our country's history back in 2001, just after the dot-com boom went bust. They listed $9 billion in debts when they filed for bankruptcy. While a settlement was reached and retirees and other debtors didn't lose everything, not everyone is so lucky. Companies go bankrupt every day and financial experts always warn their clients not to have all of their eggs in one basket, whether it be company stock, a pension or other assets. Companies are now viewing pensions as a big headache. In order to pay pensioners, they need to invest the funds and make money, which is not as easy as it once was. If they lose money, they have to fund the pension plan which means a loss on the profit and loss statement. So it was no surprise that one of the few stocks which rose on Friday, when the Dow Jones Industrial Average fell almost 300 points, was General Motors. It announced an unusual move related to its pension plan, paying Prudential Insurance Company $29 billion to take over its $26 billion in pension obligations to 98,000 retirees. "We will never have to deal with it again. This de-risks the balance sheet," CFO Dan Ammann told USA Today. GM also offered pension buyouts to 42,000 of its salaried workers, unprecedented in size. It's considering doing the same for hourly workers. Those taking the payments can receive a lump sum payment rather than a monthly check after they retire. I believe that this will become a trend, with other companies following suit. Many current workers are probably strapped for cash and will take the money. This is not necessarily a good thing for the workers because they all won't save the money for retirement. But the workers will be happy to get the cash and retirees will certainly feel safer with their money stashed with Prudential, rather than GM. The automotive industry was one of the hardest hit in the recession.
About Richard Kuehn & Family inHome Caregiving of Monterey:
After more than a decade of caregiving, both in a professional environment and for a 97 year old family member I was dissatisfied with service from local caregiving agencies. I became convinced of the need for a service which provides very personal assistance to elderly and founded Family inHome Caregiving serving the Monterey Peninsula. Please visit my blog where I talk about important senior issues at:
http://www.familyinhomecaregiving.com/Blog
The state of the stock market and the stability of many corporations has many retirees which are receiving pensions on edge. I remember when Pacific Gas & Electric (PGE) went bankrupt. There were many retirees in Carmel and Monterey which were living off of their retirement checks from PG&E and never envisioned that the local power company could go bankrupt. But it did. It was the third largest bankruptcy in our country's history back in 2001, just after the dot-com boom went bust. They listed $9 billion in debts when they filed for bankruptcy. While a settlement was reached and retirees and other debtors didn't lose everything, not everyone is so lucky. Companies go bankrupt every day and financial experts always warn their clients not to have all of their eggs in one basket, whether it be company stock, a pension or other assets. Companies are now viewing pensions as a big headache. In order to pay pensioners, they need to invest the funds and make money, which is not as easy as it once was. If they lose money, they have to fund the pension plan which means a loss on the profit and loss statement. So it was no surprise that one of the few stocks which rose on Friday, when the Dow Jones Industrial Average fell almost 300 points, was General Motors. It announced an unusual move related to its pension plan, paying Prudential Insurance Company $29 billion to take over its $26 billion in pension obligations to 98,000 retirees. "We will never have to deal with it again. This de-risks the balance sheet," CFO Dan Ammann told USA Today. GM also offered pension buyouts to 42,000 of its salaried workers, unprecedented in size. It's considering doing the same for hourly workers. Those taking the payments can receive a lump sum payment rather than a monthly check after they retire. I believe that this will become a trend, with other companies following suit. Many current workers are probably strapped for cash and will take the money. This is not necessarily a good thing for the workers because they all won't save the money for retirement. But the workers will be happy to get the cash and retirees will certainly feel safer with their money stashed with Prudential, rather than GM. The automotive industry was one of the hardest hit in the recession.
About Richard Kuehn & Family inHome Caregiving of Monterey:
After more than a decade of caregiving, both in a professional environment and for a 97 year old family member I was dissatisfied with service from local caregiving agencies. I became convinced of the need for a service which provides very personal assistance to elderly and founded Family inHome Caregiving serving the Monterey Peninsula. Please visit my blog where I talk about important senior issues at:
http://www.familyinhomecaregiving.com/Blog
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