As American companies struggle to compete in a global market, they are increasingly considering the merits of eliminating or reducing costly retiree benefits. For many companies, the costs of these benefits have become staggering. For example, before recently announcing plans to freeze health benefits for tens of thousands of its white-collar retirees, Ford Motor Co. was facing health care expenses of more than $3.5 billion. Its rival, General Motors, which according to recent reports owes a projected $89 billion in welfare and pension benefits to its current and future retirees, just announced that it will offer workers with 10 years’ experience a payment of $140,000 and a pension, if in return these workers will leave their employment and forgo health care benefits.
These large retiree benefit obligations date back to times when, in an effort to attract employees who would remain with them for their entire careers, and sometimes in order to maintain labor peace, companies promised “cradle-to-grave” benefits that would enable these employees to live comfortably in retirement. Today, however, these same companies face increased competitive pressures from both start-up companies, which typically do not offer retiree health benefits to their younger workforce, and companies located in foreign countries like Japan, which assumes responsibility for retiree benefits.
This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.
To view this content, please continue to their sites.
Not a Lexis Subscriber?
Subscribe Now
Not a Bloomberg Law Subscriber?
Subscribe Now
LexisNexis® and Bloomberg Law are third party online distributors of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® and Bloomberg Law customers are able to access and use ALM's content, including content from the National Law Journal, The American Lawyer, Legaltech News, The New York Law Journal, and Corporate Counsel, as well as other sources of legal information.
For questions call 1-877-256-2472 or contact us at [email protected]
