Wednesday, April 02, 2014

AOL chief ignites firestorm over 401(k) cuts

From the Washington Post:

The strange turn of events began Tuesday, when employees began learning that AOL was switching its 401(k) match to an annual lump sum, rather than distributing the money throughout the year with every paycheck as it had done before. Only employees who remain at the company through Dec. 31 are eligible, meaning that anyone who leaves midyear won’t see any of the pay.

A number of companies, including Deutsche Bank and IBM, have been cutting their retirement benefits this way, saving millions of dollars just as more Americans are relying primarily on their 401(k)s because traditional pensions are being phased out.

The changes undercut a central virtue of the 401(k) system, which in theory should make it easier for employees to switch companies and take their savings with them. Instead, with people changing jobs more frequently during the course of their careers, the loss in matches can add up to thousands of dollars each time a worker switches employers.

More here.

Rising tides don't lift all the boats when management puts holes in everyone's but theirs. That is, throwing money at the capitalists, as we've done now for thirty years, doesn't help the man who works for a living. When will we figure this out?