Thursday, February 5, 2004

Outlook for retirees' benefits is bleaker

The Associated Press

NEW YORK - Workers expect employers to cut more of their retirement benefits - and three-quarters of companies have either done so or plan to, a new survey says.

More than 40 percent of the employers queried have reduced medical benefits for workers who will retire in the future and an additional 35 percent said they are likely to do so, according to the survey released Wednesday by personnel consulting firm Towers Perrin.

More than two-thirds of the employers said they have shifted more medical costs to their current retirees.

In addition, more than 40 percent of the employers with traditional pension programs said they have converted to cash-balance or other hybrid plans. Such plans have drawn protests from older workers who contend the change cuts their expected benefits by as much as half.

"I think the study confirms the reality of retirement," said Kathleen FitzPatrick, a senior consultant in Towers Perrin's Dallas office.

The new reality is not lost on workers, with 78 percent saying they expect to continue working in some capacity during retirement. About 35 percent of those said they would do so for financial reasons, with 43 percent saying they would do so to stay active.

Most workers expect employers to continue offering retirement benefits, but at lower levels.

The survey tapped more than 2,000 randomly chosen workers and 365 personnel officers at 340 medium and large companies last fall.

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