Fifty years ago, an employee’s last working day looked something like this: a company party filled with cake, balloons, and a ceremony with some kind words from the boss for “a job well done for 40 years of dedicated service,” accompanied by a gold watch, a pat on the back, and a room full of smiles.

But the biggest smile of all was on the face of the retiree. Not only did he know that he’d never have to set his alarm clock again, but he also knew he’d receive a check in the mail, which he could set that gold watch to, for every single month until the day he died. But those days are nearly over.

Not your grandfather’s pension
Pensions have become a much smaller piece of Americans’ retirement savings mix over the past several decades. Specifically, during the past 15 years, employers have shifted their retirement offerings for new employees away from the traditional pension plan your grandpa probably received. In 1985, 89 Fortune 100 companies offered a traditional defined benefit, or pension, plan to newly hired salaried workers. Today only 11 companies on the Fortune 100 list offer such as traditional pension plan. Meanwhile, defined contribution plans — think 401(k)s — have become the norm.

We can chalk up the main reason for the trend to simple dollars and cents. Increased life expectancy, persistently low interest rates, and amplified stock market volatility are all working against traditional pension plans. In addition, many corporate plans must now dig themselves out of massive pension deficits because of not enough money pumped into the plan, coupled with poor planning and flawed assumptions. Put simply, companies don’t want the exposure on their balance sheets and the drag on their bottom lines.

In fact, during the most recent earnings season, both Ford and Goodyear Tire and Rubber disclosed gaping pension shortfalls. In fact, last year alone, Ford’s pension deficit widened by a cavernous 21%. Goodyear contributed nearly $650 million to its plan in 2012, up from a $233 million contribution in 2011. Yet its plan’s funded status is in the hole an extra $400 million versus one year ago. Meanwhile, UPS reported a fourth-quarter 2012 loss, resulting in part from a $3 billion non-cash pension-related accounting charge. The company faces a $225 million rise in pension costs for 2013. 

Pensions getting pink slips
But some companies are putting the ax to their pension plans. In an effort to ease its burden, Ford recently offered pension buyouts to roughly 100,000 qualifying former workers and retirees who held white-collar positions with the Detroit automaker. And last year, General Motors offloaded a large chunk of its liabilities to insurer Prudential Financial , trimming its pension liabilities by more than $25 billion. By no means did this move completely shuck all of GM‘s obligations off the books, but it significantly eliminated a big drag on the automaker’s bottom line.

What employees want
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Source: FULL ARTICLE at DailyFinance