More than 56,000 Kodak retirees got a rude jolt this week when a bankruptcy judge agreed with the company's request to terminate their benefits.
Kodak and other troubled companies may not see anything wrong in terminating benefits to employees, but there's a larger lesson here for American enterprises and workers. While one part of me would like to side with the retirees and blame Kodak, the more enlightened part of me (thank you, Intel ex-CEO and ex-chairman Andrew Grove) remembered that employment and, unfortunately, promised benefits are "at will" in the United States. This means your employer only owes you wages for work already done and does not owe you guaranteed employment or lifelong benefits beyond what it is able to pay, even if it promised much more. Employees therefore have an obligation to ensure they secure their retirement by whatever means necessary and independent of past, current, or future employers.
Grove's observation may be coming too late for many Kodak employees, but I would like to restate the six points he emphasized in his book here for current workers. He said:
Nobody owes you a career
Your career is literally your business. You own it as a sole proprietor.
You have one employee: yourself
You are in competition with millions of similar businesses -- i.e., millions of other employees all over the world
You need to accept ownership of your career, your skills, and the timing of your moves
It is your responsibility to protect your personal business of yours from harm and to position it to benefit from the changes in the environment. Nobody else can do that for you.
There are implications for businesses, too. Executives must understand that as Grove noted in his book Only the Paranoid Survive: How to Exploit the Crisis Point That Challenge Every Company, employees will become more mercenary in their actions and will not always put company interest first. You may not like the implications, but that's what the Kodak bankruptcy ruling has reinforced.
I speak from experience at Nortel which did the same thing. There should be insurance on pensions. It would cost more but then it is guaranteed and regulated reported. Hopefully Kodak at least insured its LTD disability claimants because those people believed they had insurance as part of their benefits and in fact found it could disappear. It was really sad in Nortel's case as alot of cancer and injured people took a huge hit.
The Supreme court in the US may have ruled that Companies are People too, but without a soul to save or a body to incarcerate for their wrong doings, there is no incentive to play fair.
If I was to murder someone then I'd go to jail. If a company murders someone deliberately or due to negligence then the most they get is a slap on the (proverbial) wrist, a fine and told not to do it again ... Then it's back to business as usual.
A (corporation) person devoid of emotion is NOT a (human) person. No love, no hate & no empathy means in the end, the companies get the gold mine while the real people only get the shaft.
I recently visited the George Eastman House museum in Rochester.
The museum's portrayal of Kodak as a successful company was last updated in the 1990's, looking forward to "leading photography into the next 100 years".
In the US the problem of how to reduce health care costs has become a very hotly debated issue. But it really becomes the determining factor in allowing many people to lead happy and productive lives, and the ability of US based businesses to be competitive with the rest of the world. So we had better figure it out sooner rather than later.
In the UK the government funds healthcare through taxes. Not only would the situation these poor Kodak retirees have found themselves in never arise, it is also much much cheaper: UK healthcare spending per head is about 1/3 of that in the US, for a similar standard of care (our life expectancy is actually higher than yours) with the added bonus (for those with a heart) that it is available for all.
The PBGC (Pension Guaranty Benefit Corp) is deeply in the hole. That means it will either stop paying pensions of companies that failed, or, more likely, it will get bailed out by the feds, in which case our taxes will go up even more. The govt. has thus far refused to recognize this "off the books" loss. When Enron does this sort of thing, it's considered a felony.
I hope you're referring to this one line:
"Guarantees payment of certain benefits if a defined plan is terminated, through a federally chartered corporation, known as the Pension Benefit Guaranty Corporation."
Because other than that, in the US, unless you're a government employee, you don't get a taxpayer-funded retirement plan.
Unless you're talking about Social Security, but that's way below any 65 percent level for most workers.
ERISA establishes rules for company pension plans, but ERISA doesn't even require companies to have such plans.
65% of pension will likely be paid by taxpayers, right? But those old types of pensions are gone now. In spite of everyone complaining about big government, its the only entity that can still print money. The US had 4 decades of well funded pension plans, then the 1980's came along, and its been deregulation for business and banks, and social security and ERISA http://www.dol.gov/ebsa/faqs/faq_compliance_pension.html as the safety net for workers, neither close to the old promised pension levels.