Benefits Are Vanishing Essay
Benefits Are Vanishing
Our society is changing and moving fast due to the advanced technologies. The technologies such as internet, transportation and advancement in medical have bought us more comfortable and convenient life style. It is hard to foresee how the society will be changed in the future. One of the big changes in our life is that people live longer and healthier due to the advanced medical care. Unfortunately, this becomes burden for companies who offer retirees pension plan. Because of people are living longer in retirement, the costs a lot more. Ivancevich, p382) Therefore, companies start to look for a way to get out of the promise that they made for their retirees. While companies are looking for ways to get away from their promise, there are many issues are emerging throughout the nation which includes ethical issue, and the government intervention. First of all, it is unethical for a company to promise benefits and then years later walk away from the promise. Instead of looking for the solution, it seems like they are looking for the way to get out of the situation.
Simply say, they cannot walk away from their promise that the organization made to their employees. When people are looking for a job, one of the important things that they are looking for is the good company. In addition, the benefits offered by the company may be the reasons that people are staying their job. They worked hard and stayed in the company for 30 years, because the company has a good retirement plan. The company just cannot walk away and saying ‘thank you for your 30 years hard work, but I’m sorry that the plan has been gone’. It is an obvious lie, and it is not ethical at all.
The company has to know that they have a responsibility for their employees who dedicated them self for the company. Therefore, the companies have to do their best to keep their promise. However, it cannot be ignored the problems that U. S organizations have. First, people are live longer, so that costs a lot more. Another word, since the average life expectancy has been increased, the cost of retirement plan becomes almost double which become burden for the companies. (Roger, 2009) For example, “United Airlines owes $598 million in pension payments in the next six months and a total of $4. billion by the end of 2008, plus an additional $1 billion for retiree health care benefits, obligations the ailing airline can’t begin to meet. ” (Ivancevich, p382) Secondly, the competitive market environment leads U. S companies to struggle. The organizations in U. S are facing the huge competition in global market. Many companies in these days do not offer the expensive employee retirement plan; therefore, companies who does not offer the pension plan can have significant financial advantages over the older companies in U. S who pay the retirement plan.
The recent trend that younger rivals and abroad companies that pay little or nothing toward their workers’ retirement, giving the older companies a huge incentive to dump their plans. (Ivancevich, p382) It is understandable that the society has been changed, and they are facing a big challenge to survive in the global market; however, that does not mean that could be their excuse for walking away from the promise. In fact, companies are starting to change their plans adequately to adopting the different business environment. Most of companies are now offering defined-contribution plans, such as 401(k)s, to which they contribute a set amount. Ivancevich, p383)
The cost of the defined-contribution plans is much less for employers; therefore, many companies are quickly changing their plan from defined-benefit plans to defined-contribution plans. Moreover, the retiree health care coverage is disappearing faster, because it is easier to drop the retiree health care coverage than pension benefits. According to our textbook, “Subject to fewer federal regulations, those benefits are easier to rescind and companies are fast doing so. It’s much harder to renege on pension promises. (Ivancevich, p383) Therefore, that half of the companies which offering the health care 10 years ago has now dropped the benefit entirely. (Ivancevich, p384) Cutting the retiree health care coverage is directly affect to the company’s bottom line; therefore, many companies are eliminating the retiree health care coverage.
Many changes in pension plans in U. S are not ended between employees and employers. It brought the domino effect to the society. When the government stepped in, and intervene the situation by lowering the interest rate for their catch-up pension contributions, it increases the chances taxpayers will have to step in. Ivancevich, p383) The question is who has the power to handle the problem? It seems like it is already over the line that the companies can handle. Then, should the government pay for all pension guarantees? If government stepped in, and pay for the pension, the tax will be increased for taxpayers. Instead of the solving the problem, the burden is kept going around and affecting everyone in the society. The way I see the pension plan issue is a process and a step toward new era. It seems like there is no win-win solution for this.
Unfortunately, somebody has to be scarified and pay for the price. That could be companies, employers or could be anybody. Now, they have to look for the way to minimize the impact. I believe the pension issues become a lesson for both employees and employers. Going through the pension issue, people can have better idea how to prepare for their retirement. In addition, companies learned that they have a responsible for their employees and society. I hope that they find a best solution for both retirees and companies.
University/College: University of California
Type of paper: Thesis/Dissertation Chapter
Date: 29 October 2016
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