Business Week: "A New Twist on Retiree Healthcare"

[Nords]

My FIL has been watching CBS thin-slice their retiree health-care salami. Now companies are starting to go the defined-contribution route:

"The nation's pension crisis, it turns out, is only the second-largest long-term liability facing U.S. businesses. Far greater are underfunded health-insurance promises to current and future retirees. The companies that make up the Standard & Poor's 500-stock index are an astonishing $321 billion shy of what they need... By yearend the Financial Accounting Standards Board is likely to require companies to put this liability on their balance sheets, a step that could shrink shareholder equity by as much as 9%.
Many companies have been trimming those costs by dumping retiree health care entirely. In 1993, 40% of large employers offered such benefits to those over 65. By 2005 just 21% did...
A small but growing number of companies are trying one new approach: transforming retiree insurance into a 401(k)-type perk.
About 5% of employers who offer benefits have switched to such defined-contribution accounts, including DaimlerChrysler, which will move managers and other nonunion workers into one in 2007. An additional 13% have simply capped yearly retiree health spending."

http://www.businessweek.com/print/ma...97.htm?chan=gl

[Texas Proud]

Our company used to offer employees the ability to continue their health insurance plan after turning 55... the group rate..

But, with the mega merger and 'expense guru' at the top... that went away this year... anybody below 50 loses all ability to keep in the plan...

I was looking forward to THAT perk.. but,,, by by

[TromboneAl]

My take is that this is good news, since it will help reduce healthcare costs.

[lazygood4nothinbum]

had i stuck around for another 7 years my s&p fortune 5 employer would have contributed about $200/month towards private health insurance from ages 55 to 65. didn't seem worth the wait.

for the small pension at 65, i was only figuring on that as a monthly car payment. i won't miss it if it goes away. though the company is generally very conservative so i suspect it will be there even then.

when i lost my company car a few years ago, i got a small taste of what it feels like to have worked for a company for so many years under the impression that you were getting certain compensation only to find that rug pulled out from under you. how much worse if i would have been counting on that for retirement.

[astromeria]

I wonder how neatly the underfunding of employee health care and pensions maps onto the overfunding of executive compensation :