The same fate suffered by many auto workers, even after the industry was "saved" with infusion of taxpayer contributions. That's how GM was saved.
When I was just starting out in my present career, one of my colleagues told me that we don't owe any special allegiance to the company. In a real sense, we are all free agents. The company can drop us at any time of their choosing, and likewise we should feel that we can move on, with no compulsions, if opportunities arise.
Kodak was in an especially difficult spot, I think, because their main business was in film. Not so much in photographic equipment. Film is replaced by reusable sensors, and other companies, also struggling in some cases (what happened to Yashica/Contax?), make the equipment.
I hope the Kodak retirees have well diversified retirement pension/savings plans.
There is something to be said about managing your own retirement through an investment vehicle such as an IRA or 401K. But I fear that even 401K's and IRA's may not be as safe as many believe.
There are many ways that these can be pillaged: Excessive management fees, illicit bankers and brokers, phony investment funds, etc.
My real fear is that without stricter protection through legislation, no one will be safe. Someone somewhere at sometime in the future will raid proples returement funds on a mass scale 401K's and IRA's. It just hasn't happened yet.
I don't think the ultimate form of an individual retirement account (i.e. physically holding Au) is the answer either to many ways to take it from you either by force or law.
Not really about 401K. These are "untouchable" by a company that has failed. They are usually managed by a 401K finance management company (Fidelity, etc.) This is about:
"retiree medical, dental, life insurance and survivor income benefits."
It is very sad that the swift change to digital photos wrecked this once great company. Say what you will about them reacting too slow...it is still a sad day for people who spent their lives devoted to a company to have it come to this.
This really is part of a bigger issue in that people don't work for a company long enough to make pensions reasonable - the demographically the readers of this site are pretty secure, but the majority of the US population - the vaulted "middle class" with little employment representation, constant job hopping, loss of seniority/security life can be very different. As free agents many of us would like to think we can manage career, 401k's, house and other investments well, how many of us knew/planned for the changes in industry over the last 20 years - the internet, manufacturing move China, real estate drop, the rise of Apple ect.. Hopefully, as mentioned before, if you are diversified you are doing well - we used to know what to expect (more a fantasy as of late) and now we each have "control", but with the dynamic nature of the economy these days how many of us can feel very secure?
56,000 employees have now had a major financial hit. Why is it all or nothing, could Kodak have paid something (or are they)? And how much is the US Government going to have to pay to cover the difference?
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.
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.
I think the advice to control your own retirement savings is prudent - even essential.
However, trusting government legislation and regulation to protect these assets seems to avoid the largest risk.
Does anyone truly believe that if (I would argue _when_) the dollar really collapses in a hyperinflationary death spiral, that the all-benevolent federal government will not seize these assets - whether by higher confiscatory tax rates or outright confiscation?
Well, there is the Pension Guarantee insurance fund, so there's a chance that Kodak employee pensions will be covered by the taxpayer---I don't know the details of course, so this is just a speculation.
BTW, Kodak saw the 'electro-optical' revolution coming and made one of the first digital cameras---I even owned one. They just didn't innovate fast enough to gain market share in this area, perhaps because they weren't an electronics company and couldn't drive the cost curve low fast enough.
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.
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.
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.
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".
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 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.
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