Over the years, giant corporations have been relying less and less on traditional pension plans. Lifetime employment and a healthy retirement payout used to be the accepted norms in business in the United States, but these have slowly given way to the elimination of the defined benefit plans and to jobs that last only a few years. The emphasis these days is on defined contribution plans, such as 401(k) plans where employees are responsible for saving on their own, although big companies still offer some matching of employee contributions. Below are five big companies that have cut down on their traditional pension plans in recent years.

General Motors
Most recently, auto giant General Motors (GM) announced it would be cutting about a quarter of its pension plan. The move will actually shift roughly $26 billion of its $109 billion pension liability to insurer Prudential. The transaction has a number of moving parts, including a $4 billion cash payment that GM will make to Prudential. GM has been interested in lowering its future liabilities, and though it still leaves a sizeable future liability, it does appear to make a significant dent in its pension obligations and shift much of the future risk to a party that should be more adept at managing it.

American Airlines
A trip through bankruptcy court usually serves as an opportunity for a company to adjust its pension obligations. Airline giant American Airlines recently declared bankruptcy and has discussed cutting down on the pension promises it has made to its roughly 130,000 employees. A recent report estimated that American only had 45% of the $18.5 billion in pension liabilities on its books. The report suggested that some pilots could lose their current plans, while there is almost certainly to be major cutbacks, or even an elimination of the pension plan for current or future employees.

Last fall, The Wall Street Journal published an article detailing how many companies have been steadily cutting back on pension benefits for current and retired workers. It cited an example where a retired employee estimated his benefits were cut back to $18,000 annually, down from $50,000 and due to a freezing or reduction in benefits. It also mentioned the ability for companies to offer lump sum payouts, which can eliminate future liabilities and has likely been utilized by large telecom players too.

Back in 2005, telecom giant Verizon announced a freeze in its traditional pension plan and a shift to emphasizing its 401(k) plan. In the announcement, the company cited the fact that many competitors were doing the same thing, so to stay competitive it had to start shifting from the traditional retirement plans to ones where workers share more of the burden for having to save for their golden years.

General Electric
In late 2010, industrial and financial services powerhouse General Electric announced it would no longer be offering its traditional retirement fund to new employees. Instead, workers now must save through its 401(k) plan. Familiar reasons were cited, including the need to remain competitive, and that the retirement obligations had increasingly been a drag on GE's earnings.

The Bottom Line
During the credit crisis, big companies even stopped provided matches, or lowered them significantly, on the new defined contribution plans. Saving for retirement is increasingly the responsibility of individual workers, and that is unlikely to change going forward.

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